Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

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History

Chapter 4 inserted by No 162 of 2001.

PART 4-5 - GENERAL  

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Part 4-5 inserted by No 162 of 2001.

Division 820 - Thin capitalisation rules  

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Division 820 inserted by No 162 of 2001.

Subdivision 820-E - Thin capitalisation rules for inward investing entities (ADI)  

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Subdivision 820-E inserted by No 162 of 2001.

Operative provisions

SECTION 820-405  

820-405   Safe harbour capital amount  

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The entity ' s safe harbour capital amount for the income year 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 that part of the *risk-weighted assets of the entity that:

(a) is attributable to the *Australian permanent establishments at or through which it carries on its banking business in Australia; but

(b) is not attributable to the *OB activities of the Australian permanent establishments.

Step 2.

Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .

Example:

The Global Bank is a foreign bank that carries on its banking business in Australia through a permanent establishment. The average value of its relevant risk-weighted assets is $140 million. Multiplying that amount by 6% results in $8.4 million, which is the safe harbour capital amount.

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S 820-405 amended by No 110 of 2014, s 3 and Sch 1 items 16 and 47, by substituting " 6% " for " 4% " in method statement, step 2 and substituting the example, applicable to assessments for income years starting on or after 1 July 2014. The example formerly read:

Example:

The Global Bank is a foreign bank that carries on its banking business in Australia through a permanent establishment. The average value of its relevant risk-weighted assets is $140 million. Multiplying that amount by 4% results in $5.6 million, which is the safe harbour capital amount.

S 820-405 inserted by No 162 of 2001.

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