INCOME TAX ASSESSMENT ACT 1936

PART III - LIABILITY TO TAXATION  

Division 9A - Offshore banking units  

Subdivision C - Operative provisions  

SECTION 121EH   121EH   LOSS OF SPECIAL TREATMENT WHERE EXCESSIVE USE OF NON-OB MONEY  


If:


(a) the subsection 121EDA(3) exception in respect of the lending, investing or other use of non-OB money of an OBU in carrying on activities did not apply to exclude amounts from its assessable OB income; and


(b) as a result, more than 10% of what would then be the OBU's assessable OB income of any year of income would be attributable to that lending, investing or other use of non-OB money;

then:


(c) subsection 121EG(1) (which limits the OBU's assessable income) does not apply to the OBU's assessable OB income of the year of income; and


(d) subsection 121EG(2) (which limits the OBU's allowable deductions) does not apply to so much of each allowable OB deduction of the OBU for the year of income as is calculated using the formula:


Allowable OB deduction   ×                 Assessable OB income                
Sum of allowable OB deductions


(where each amount is worked out ignoring the assumption in paragraph (a)); and


(e) subsection 121EG(3A) (which limits the OBU's foreign income tax) does not apply to the OBU in relation to an amount of foreign income tax (within the meaning of the Income Tax Assessment Act 1997 ) the OBU paid in respect of an amount of the OBU's assessable OB income of the year of income.


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