Income Tax Assessment Act 1997



Division 820 - Thin capitalisation rules  

Subdivision 820-EA - Some financial entities may choose to be treated as ADIs  

SECTION 820-430   When choice can be made, and what effect it has  


An entity may choose to be treated, for the purpose of this Division (except this Subdivision), as set out in the table. However, the entity can make the choice only if subsection (5) is satisfied.

Choice by financial entity to be treated as an ADI
Column 1 Column 2
Item For a period that the choice covers, and for which the entity would, apart from this Subdivision, have been: The entity is treated as if it had instead been:
1 an *outward investing financial entity (non-ADI) an *outward investing entity (ADI)
2 an *inward investor (financial) an *inward investing entity (ADI)
3 an *inward investment vehicle (financial) an *outward investing entity (ADI)

The choice:

(a)    has effect accordingly, except as provided in subsection (4) ; and

(b)    ceases to have effect only as provided in this Subdivision; and

(c)    covers each period:

(i) that started on or after a day specified in the choice (or on the day the choice is made if no day is specified); and

(ii) that is all or part of an income year.

Subdivision 820-E applies to the entity, in relation to a period for which this section treats it as an *inward investing entity (ADI), as if all the entity's *business were banking business of the entity.

The choice does not have effect for the purposes of determining whether the entity is covered by paragraph 820-910(2)(a) (about working out the associate entity debt of another entity).

Conditions for making the choice

For the income year that is or includes the first period for which the entity would be treated in accordance with the choice, the entity must satisfy:

(a)    subsection 820-435(1) ; or

(b)    subsections 820-435(2) and (3) .

Also, the entity must not have made a previous choice under this section that has ceased to have effect.

Conditions are retested every 3 years

The choice ceases to have effect, or is taken to have ceased to have effect, as appropriate, at the end of an income year covered by subsection (7) of this section, unless the entity:

(a)    satisfies subsection 820-435(1) for that income year; or

(b)    satisfies subsections 820-435(2) and (3) for that income year.

This subsection covers every third income year after the one referred to in subsection (5) .

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