Income Tax Assessment Act 1997
This subsection disallows all or a part of each *debt deduction of an entity for an income year if, for that year:
(a) the entity is an *inward investing entity (ADI) (see subsection (2)); and
(b) the entity ' s *average equity capital (see subsection (3)) is less than its *minimum capital amount (see section 820-400 );
to the extent that the debt deduction:
(c) is attributable to an *Australian permanent establishment of the entity at or through which it carries on its banking business; and
(d) is not an *allowable OB deduction.
This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $2 million or less, see section 820-35 .
To work out the amount to be disallowed, see section 820-415 .
For the rules that apply to an entity that is an inward investing entity (ADI) for part of an income year, see section 820-420 in conjunction with subsection (2) of this section.
A consolidated group or MEC group may be an inward investing entity (ADI) to which this Subdivision applies: see Subdivision 820-FB .
The entity is an inward investing entity (ADI) for a period that is all or a part of an income year if, and only if, throughout that period, the entity is a *foreign bank that carries on its banking business in Australia at or through one or more of its *Australian permanent establishments.
The entity is required to keep certain records, see Subdivision 820-L .Average equity capital 820-395(3)
The entity ' s average equity capital for an income year is the sum of the following:
(a) the average value, for that year, of the *ADI equity capital of the entity that:
(i) is attributable to the *Australian permanent establishments at or through which it carries on its banking business in Australia; but
(ii) has not been allocated to the *OB activities of the Australian permanent establishments;
(b) the average value, for that year, of the total amounts that:
(i) are made available by the entity to the Australian permanent establishments of the entity as loans to the Australian permanent establishments; and
(ii) do not give rise to any *debt deductions of the entity for that or any other income year.
To calculate an average value for the purposes of this Division, see Subdivision 820-G .
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