Taxation (Multinational - Global and Domestic Minimum Tax) Rules 2024

CHAPTER 3 - COMPUTATION OF GloBE INCOME OR LOSS  

PART 3-2 - ADJUSTMENTS TO DETERMINE GloBE INCOME OR LOSS  

Division 1 - Article 3.2.1 adjustments  

SECTION 3-85   MEANING OF QUALIFIED DEBT RELEASE AMOUNT  

3-85(1)    
The qualified debt release amount for a Fiscal Year, of a Constituent Entity that is a debtor, means an amount in respect of a debt release if:

(a)    the debt release is under a statutory insolvency or bankruptcy proceeding:

(i) that is supervised by a court or other judicial body; or

(ii) under which an independent insolvency administrator is appointed; or

(b)    the following conditions are met:

(i) the debt release arises under an arrangement with one or more creditors that are not connected with the debtor (each of which is a third-party creditor );

(ii) it is reasonable to consider that, in the absence of the release of debts owed to one or more third-party creditors under the arrangement, the debtor would be insolvent within 12 months of the date of the release;

(iii) the debtor obtains an independent expert opinion attesting that the condition in subparagraph (ii) is met; or

(c)    if neither paragraph (a) nor (b) applies:

(i) the debt release arises under an arrangement with one or more creditors that are not connected with the debtor (each of which is a third-party creditor ); and

(ii) the amount is in respect of a debt owed to a third-party creditor; and

(iii) the debtor ' s liabilities exceed the fair market value of its assets, determined immediately before the debt release; and

(iv) the amount does not exceed the amount covered under subsection (2) .

3-85(2)    
For the purposes of subparagraph (1)(c)(iv) , this subsection covers the amount that is the lesser of the following amounts:

(a)    if, as a result of the debt release, the debtor ' s assets are greater than or equal to its liabilities - the debtor ' s liabilities less the fair market value of its assets, determined immediately before the debt release;

(b)    if any amount included, as a result of the debt release, in computing net income or loss is offset by a corresponding reduction in deferred tax assets - the reduction in the debtor ' s deferred tax assets resulting from the debt release.