Income Tax Assessment Act 1997
The amount of *debt deduction disallowed under subsection 820-85(1) is worked out using the following formula:
|Debt deduction ×||
(a) the average value, for the income year, of the entity ' s *debt capital that is covered by step 1 of the method statement in subsection 820-85(3) ; and
(b) the average value, for that year, of the entity ' s *cost-free debt capital that is covered by step 5 of that method statement;
(disregarding any amount that is attributable to the entity ' s *overseas permanent establishments in working out the average values).
means each *debt deduction covered by subsection 820-85(1) .
means the amount by which the entity ' s *adjusted average debt for that year (see subsection 820-85(3) ) exceeds its *maximum allowable debt for that year.
The disallowed amount also does not form part of the cost base of a CGT asset. See section 110-54 .