Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-I - Associate entities  

SECTION 820-915   Associate entity equity  

820-915(1)  
This section applies to an entity (the relevant entity ) that is an *outward investing entity (non-ADI) or an *inward investing entity (non-ADI) for a period (the relevant period ) that is all or a part of an income year.

820-915(2)  
This section also applies, for the relevant entity, to each entity ( relevant associate entity ) that is an *associate entity of the relevant entity and that is:


(a) an *Australian entity; or


(b) a *foreign entity that, throughout the relevant period, holds any of the following assets:


(i) assets that are attributable to the foreign entity ' s *Australian permanent establishments;

(ii) other assets that are held for the purposes of producing the foreign entity ' s assessable income.

820-915(3)  
The relevant entity ' s associate entity equity at a particular time during the relevant period is the total value of:


(a) all the *equity interests that the entity holds, at that time, in relevant associate entities; and


(b) all the *debt interests *on issue and held by the relevant entity at that time that satisfy all of the following:


(i) the interests were *issued by relevant associate entities;

(ii) neither the value of each of the interests, nor any part of that value, is all or a part of any *cost-free debt capital of the issuer of the interest at that time;

(iii) none of the interests gives rise to any cost, at any time, that is covered by paragraph 820-40(1)(a) ; and


(c) all the debt interests on issue and held by the relevant entity at that time that satisfy both of the following:


(i) the interests were issued by relevant associate entities;

(ii) each of the interests gives rise to a cost, at any time, that is covered by paragraph 820-40(1)(a) , but the cost is not deductible from the assessable income of the issuer of the interest for any income year.

820-915(4)  
For the purposes of subsection (3), take into account the value of an *equity interest in, or a *debt interest issued by, a *foreign entity only to the extent that the interest is attributable to assets covered by subparagraph (2)(b)(i) or (ii) that are held by the foreign entity throughout the relevant period.


 

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