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 820-615   How Subdivision 820-E applies  

820-615(1)  
This section has effect for the purposes of applying Subdivision 820-E to the *head company or single company in relation to a period (the test period ) that is all or part of the grouping period.

Note:

Subdivision 820-E applies to the head company or single company if it is classified as an inward investing entity (ADI) because of section 820-609 .

Average equity capital

820-615(2)  


The average equity capital of the *head company or single company for the test period is:


(a) the average value, for that period, of all the *ADI equity capital of the company; plus


(b) the average value, for that period, of the amount worked out under subsection 820-613(3) .

Note 1:

In the case of a choice under section 820-599 , paragraph 820-603(4)(b) treats the single company and the relevant Australian permanent establishments as a consolidated group.

Note 2:

To calculate an average value for the purposes of this Division, see Subdivision 820-G .

Safe harbour capital amount

820-615(3)  


The safe harbour capital amount of the *head company or single company for the test period is worked out using the following method statement. Method statement

Step 1.

Work out the average value, for the test period, of the *head company ' s or single company ' s *risk-weighted assets.


Step 2.

Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .

Risk-weighted assets

820-615(4)  


For each of the establishment entity ' s *Australian permanent establishments covered by the choice, the *risk-weighted assets of the *head company or single company include that part of the entity ' s risk-weighted assets that:


(a) is attributable to that Australian permanent establishment; and


(b) is not attributable to the entity ' s *OB activities.


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