Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-D - Thin capitalisation rules for outward investing entities (ADI)  

Operative provisions

SECTION 820-330   Application to part year periods  

820-330(1)  
This subsection disallows all or a part of each *debt deduction of an entity for an income year that is an amount incurred by the entity during a period that is a part of that year (to the extent that it is not attributable to an *overseas permanent establishment of the entity) if, for that period:


(a) the entity is an *outward investing entity (ADI); and


(b) the *adjusted average equity capital of the entity is less than the entity ' s *minimum capital amount.

Note:

To determine whether an entity is an outward investing entity (non-ADI) for that period, see subsection 820-300(2) .

820-330(2)  


The entity ' s adjusted average equity capital for that period is:


(a) the average value, for that period, of all the ADI equity capital of the entity (other than ADI equity capital attributable to any of its *overseas permanent establishments); minus


(b) the average value, for that period, of all the *controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to any of its overseas permanent establishments).

820-330(3)  
For the purposes of determining:


(a) the entity ' s *minimum capital amount for that period; and


(b) the amount of each *debt deduction to be disallowed;

sections 820-305 to 820-325 apply in relation to that entity and that period with the modifications set out in the following table:


Modifications of sections 820-305 to 820-325
Item Provisions Modifications
1 Sections 820-305 to 820-325 A reference to an income year is taken to be a reference to that period
2 Section 820-325 A reference to subsection 820-300(1) is taken to be a reference to subsection (1) of this section
3 Section 820-325 adjusted average equity capital has the meaning given by subsection (2) of this section
average debt is taken to be the average value, for that period, of all the *debt capital of the entity that gives rise to *debt deductions of the entity for that or any other income year, to the extent that the debt capital is not attributable to any of the entity ' s *overseas permanent establishments


 

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