INCOME TAX ASSESSMENT ACT 1997 [ARCHIVE]

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-F - Thin capitalisation rules for resident TC groups  

How this Division applies to a resident TC group

SECTION 820-562 [ARCHIVE]   Application of Subdivision 820-D to group  

820-562(1)  
This section has effect for the purposes of applying Subdivision 820-D to a *resident TC group that is an *outward investing entity (ADI) for an income year.

820-562(2)  
The group's adjusted average equity capital for the income year is the average value, for that year, of the amount worked out under subsection (3).

Note:

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

820-562(3)  
The amount worked out under this subsection as at a particular day is:


(a) the total of the amounts worked out under the table below for each member of the group that is covered by an item in the table and is in the group on that day (except so much of that total as is attributable to any of the *overseas permanent establishments of such members); minus


(b) the total of the *controlled foreign equity, at the end of that day, of each member of the group that is in the group on that day (except so much of that total as is attributable to any of the overseas permanent establishments of such members).

Note:

To work out the times during the income year when an entity or Australian permanent establishment was in the group, see section 820-530 .


Resident TC group that is an outward investing entity (ADI)
Item For: The amount is:
1 a company that, at the end of the income year:
(a)   is an *ADI; or

(b)   is a *100% subsidiary of an *ADI
the total value of all the company's tier 1 capital (within the meaning of the *prudential standards) as at the end of that day; minus

the value of the company's *debt capital that is part of that tier 1 capital at the end of that day
2 a partnership or trust, all interests in whose income and capital are beneficially owned at the end of the income year by one or more entities in the group covered by item 1 the total value of all the tier 1 capital (within the meaning of the *prudential standards) of the partnership or trust as at the end of that day; minus

the value of the *debt capital of the partnership or trust that is part of that tier 1 capital at the end of that day
3 a company that is not covered by item 1 the total value, as at the end of that day, of the company's *paid-up share capital, retained earnings, general reserves and asset revaluation reserves; minus

the value of the company's *debt capital that is part of the company's paid-up share capital at the end of that day; plus

the value of the company's debt capital at the end of that day that does not give rise to any *debt deductions of the company for the income year or any other income year
4 a partnership or trust that is not covered by item 2 the total value, as at the end of that day, of the capital and reserves of the partnership or trust; minus

the value of the *debt capital of the partnership or trust that is part of the capital of the partnership or trust at the end of that day; plus

the value of the debt capital of the partnership or trust at the end of that day that does not give rise to any *debt deductions of the partnership or trust for the income year or any other income year
5 an *Australian permanent establishment through which a *foreign bank carries on its banking business in Australia the *equity capital of the foreign bank, as at the end of that day, that:

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

(b)   has not been allocated to the *OB activities of the foreign bank;

plus the total of the amounts that, as at the end of that day:

(c)   are made available by the foreign bank to the Australian permanent establishment as loans to the Australian permanent establishment; and

(d)   do not give rise to any *debt deductions of the foreign bank for the income year or any other income year

820-562(4)  
For each *Australian permanent establishment through which a *foreign bank carries on its banking business in Australia and that is in the group, the group's *risk-weighted assets include that part of the *risk-weighted assets of the foreign bank that:


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


(b) is not attributable to the *OB activities of the foreign bank.




This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.