Tax and Superannuation Laws Amendment (2014 Measures No. 4) Act 2014 (110 of 2014)

Schedule 1   Thin capitalisation

Part 7   Consequential amendments

Income Tax Assessment Act 1997

36   Subsection 820-200(2) (example)

Repeal the example, substitute:

Example: KJW Finance Pty Ltd, a company that is an Australian entity, has an average value of assets of $120 million.

The average values of its excluded equity interests, associate entity debt, associate entity equity, its non-debt liabilities and its zero-capital amount are $5 million, $5 million, $3 million, $2 million and $5 million respectively. Deducting these amounts from the result of step 1 (through applying steps 1A to 5) leaves $100 million. Multiplying $100 million by 15/16 results in $93.75 million. Adding the zero-capital amount of $5 million to $93.75 million results in $98.75 million. As the company does not have any associate entity excess amount, the total debt amount is therefore $98.75 million.