Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)

Schedule 3   Thin Capitalisation: amendments taking effect on 1 July 2003

Part 1   Definition of equity capital and related concepts

Income Tax Assessment Act 1997

8   Subsections 820-613(2) and (3)

Repeal the subsections, substitute:

Adjusted average equity capital

(2) The *adjusted average equity capital of the *head company or single company for the test period is increased by the average value, for the period, of the amount worked out under subsection (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.

(3) The amount worked out under this subsection as at a particular day is the total of the amounts worked out under the following paragraphs for each *Australian permanent establishment through which the *foreign bank carried on its banking business in Australia on that day:

(a) the *ADI equity capital of the foreign bank, as at the end of that day, that:

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

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

(b) the amounts that, as at the end of that day:

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

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

Note: The amounts are to be worked out, so far as practicable, on the basis of the information that would be contained in a set of consolidated accounts. See section 820-611.