Income Tax Assessment Act 1997
View history note
Hide history note[ CCH Note: Subdiv 820-C heading will be amended by No 23 of 2024, s 3 and Sch 2 item 54, by inserting " financial " after " investing " , effective 1 July 2024. For application provisions, see note under s 705-60 .]
SECTION 820-195 820-195 Safe harbour debt amount - inward investment vehicle (general)
If the entity is an *inward investment vehicle (general) for the income year, the safe harbour debt amount is the result of applying the method statement in this section. Method statement
Step 1.
Work out the average value, for the income year, of all the assets of the entity.
Step 1A.
Reduce the result of step 1 by the average value, for that year, of all the *excluded equity interests in the entity.
Step 2.
Reduce the result of step 1A by the average value, for that year, of all the *associate entity debt of the entity.
Step 3.
Reduce the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity.
Step 4.
Reduce the result of step 3 by the average value, for that year, of all the *non-debt liabilities of the entity. If the result of this step is a negative amount, it is taken to be nil.
Step 5.
Multiply the result of step 4 by ⅗ .
Step 6.
Add to the result of step 5 the average value, for that year, of the entity ' s *associate entity excess amount. The result of this step is the safe harbour debt amount .
Example:
ALWZ Ltd, a company that is an Australian entity, has an average value of assets of $100 million.
The average values of its excluded equity interests, associate entity debt, associate entity equity and non-debt liabilities are $5 million, $10 million, $5 million and $5 million respectively. Deducting these amounts from the result of step 1 (through applying steps 1A to 4) leaves $75 million. Multiplying $75 million by ⅗ results in $45 million. As the average value of the company ' s associate entity excess amount is $2 million, the safe harbour debt amount is therefore $47 million.
[ CCH Note: S 820-195 will be repealed by No 23 of 2024, s 3 and Sch 2 item 62, effective 1 July 2024. For application provisions, see note under s 705-60 .]
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