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.


View surrounding sectionsView surrounding sectionsBack to top


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