Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-FB - Grouping branches of foreign banks and foreign financial entities with a consolidated group, MEC group or single Australian resident company  

Effect of choice

SECTION 820-609   Effect on classification of head company or single company  

820-609(1)    
The *head company or single company is an outward investing entity (ADI) for a period (the trial period ) that is all or part of the grouping period if:

(a)    apart from this Subdivision, the head company or single company would be an *outward investing entity (ADI) for the trial period; or

(b)    apart from this Subdivision, the head company or single company would be:

(i) an *outward investing entity (non-ADI) and an *outward investor (financial) for the trial period; or

(ii) an *outward investing entity (non-ADI) and an *outward investor (general) for the trial period;

and at least one of the *Australian permanent establishments is a *permanent establishment through which a *foreign bank carries on banking *business in Australia.

820-609(2)    
The *head company is also an outward investing entity (ADI) for the trial period if, apart from this Subdivision:

(a)    

section 820-585 would prevent the disallowance of a *debt deduction for the income year including the trial period; or

(b)    section 820-587 would apply Subdivision 820-D to the head company as if it were an *outward investing entity (ADI) for the trial period.

820-609(3)    
The single company is also an outward investing entity (ADI) for the trial period if it is both a *foreign controlled Australian company and an *ADI for that period.

820-609(4)    
The *head company or single company is an inward investing entity (ADI) for the trial period if:

(a)    apart from this Subdivision, it would be an *inward investment vehicle (general) or an *inward investment vehicle (financial), and not an *outward investor (general) or an *outward investor (financial), for the trial period; and

(b)    at least one of the *Australian permanent establishments is a *permanent establishment through which a *foreign bank carries on banking *business in Australia.

820-609(5)    
The *head company or single company is an outward investing entity (non-ADI) and an outward investor (financial) for the trial period if, apart from this Subdivision, it would be an *outward investing entity (non-ADI) and:

(a)    an *outward investor (financial); or

(b)    an *outward investor (general);

for that period, and:

(c)    at least one of the *Australian permanent establishments is a *permanent establishment of a *foreign entity that is a *financial entity; and

(d)    none of the Australian permanent establishments is a permanent establishment through which a *foreign bank carries on banking *business in Australia.

820-609(6)    
The *head company or single company is an inward investing entity (non-ADI) and an inward investment vehicle (financial) for the trial period if, apart from this Subdivision, it would be an *inward investing entity (non-ADI) and:

(a)    an *inward investment vehicle (financial); or

(b)    an *inward investment vehicle (general);

for that period and not an *outward investor (general) or an *outward investor (financial) for that period and:

(c)    at least one of the *Australian permanent establishments is a *permanent establishment of a *foreign entity that is a *financial entity; and

(d)    none of the Australian permanent establishments is a permanent establishment through which a *foreign bank carries on banking *business in Australia.

820-609(7)    

This section has effect despite any other provision of this Division, except Subdivision 820-EA and section 820-610 .

Note:

If the head company or single company is an outward investor (financial) or inward investment vehicle (financial) under this section and satisfies subsection 820-430(5) , it may choose under Subdivision 820-EA to be treated as an outward investing entity (ADI). Section 820-603 affects whether the company satisfies that subsection, by treating as part of the company each relevant foreign financial entity's Australian permanent establishment.