Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-FA - How the thin capitalisation rules apply to consolidated groups and MEC groups  

Operative provisions

SECTION 820-588   Choice to treat specialist credit card institutions as being financial entities and not ADIs  

820-588(1)  
If the conditions in subsection (2) are met in relation to a *consolidated group or *MEC group and a period that is all or part of an income year, this Division (except this section) has effect as if:


(a) none of the *members of the group were an *ADI at any time in the period; and


(b) each member of the group that is an ADI (ignoring paragraph (a)) at any time in the period were a financial entity at that time.

Note 1:

One result of this Division having effect in that way is that Subdivision 820-D (and related provisions, such as section 820-589 ) will not apply in relation to the head company, because:

  • (a) the head company of the group will not be classified under section 820-583 as an outward investing entity (ADI); and
  • (b) section 820-587 will not apply that Subdivision.
  • Note 2:

    Another result of this Division having effect in that way is that Subdivision 820-B or 820-C may apply in relation to the head company, because it may be classified under section 820-583 as either:

  • (a) an outward investing entity (non-ADI) and an outward investor (financial); or
  • (b) an inward investing entity (non-ADI) and an inward investment vehicle (financial).
  • 820-588(2)  
    The conditions are that:


    (a) at all times in the period at least one *member of the *consolidated group or *MEC group is an *ADI; and


    (b) each ADI that is a member of the group at any time in the period is a *specialist credit card institution at that time; and


    (c) the *head company of the group for the period chooses, before lodging its *income tax return for the income year, that this Division should have effect in that way in relation to the group and every period for which the conditions in paragraphs (a) and (b) are met in the income year.

    820-588(3)  
    An *ADI is a specialist credit card institution at a time if, at that time, the ADI's authority under section 9 of the Banking Act 1959 to carry on banking business (as defined in that Act) authorises the ADI to carry on only banking business that:


    (a) is participation in a payment system (as defined in the Payment Systems (Regulation) Act 1998 ) that is a credit card scheme and is designated under section 11 of that Act; and


    (b) is either or both of the following:


    (i) credit card acquiring (as defined in regulations made for the purposes of the Banking Act 1959 );

    (ii) credit card issuing (as defined in those regulations).

    820-588(4)  
    To avoid doubt, a choice for the purposes of paragraph (2)(c) cannot be revoked.


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