Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-H - Control of entities  

TC direct control interest, TC indirect control interest and TC control tracing interest

SECTION 820-860   TC direct control interest in a trust  

820-860(1)  
A thin capitalisation direct control interest (or a TC direct control interest ) that an entity holds in a trust at a particular time is the percentage of the direct control interest (if any) that the entity holds in the trust at that time under the provisions applied by subsection (2).

820-860(2)  
For the purposes of subsection (1), provisions of Part X of the Income Tax Assessment Act 1936 are applied with the modifications set out in the following table.


Modifications of provisions in Part X of the Income Tax Assessment Act 1936
Item Provisions Modifications
1 Section 351 (including any other provision in Part X of the Income Tax Assessment Act 1936 that defines a term used in the section) The section applies for the purposes of this Subdivision rather than only for the purposes of Part X of the Income Tax Assessment Act 1936
2 Subsections 351(3) and (4) The subsections do not apply

820-860(3)  
In addition, for the purposes of determining whether or not an entity (other than a trust mentioned in paragraph (a) or (b)) is a *foreign controlled Australian entity:


(a) if a trust is covered by paragraph 820-790(1)(c) - a foreign entity that is an object of the trust at a particular time is taken to hold, at that time, a TC direct control interest in the trust that is equal to 100%; and


(b) if a trust is covered by paragraph 820-790(1)(d) - a foreign entity that is in a position to control the trust at a particular time is taken to hold, at that time, a *TC direct control interest in the trust that is equal to 100%.

Note:

The foreign entity therefore holds a TC control tracing interest in the trust (see section 820-875 ). That interest may then be taken into account in calculating any TC indirect control interest that the foreign entity holds in another entity in relation to which the trust is an interposed entity (see section 820-870 ). As a result, that other entity may become a foreign controlled Australian entity.


 

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