Step 4: Calculate the worldwide gearing debt amount

Step 4.1: Calculate the entity's statement worldwide debt for the income year.

This amount is calculated using specified audited consolidated financial statements.

Insert this amount at Z on Worksheet 22: Inward investor (financial)'s step 4.

Statement worldwide debt is the amount of liabilities for the period less the following amounts:

• provisions
• liabilities in relation to distributions to equity participants
• trade payables
• deferred tax liabilities
• liabilities relating to employee benefits
• current tax liabilities
• deferred revenue
• liabilities relating to insurance
• any other amount specified by legislative instrument.

Refer to subsection 820-933(1) of the ITAA 1997.

Step 4.2: Calculate the entity's statement worldwide equity for the income year.

This amount is calculated using specified audited consolidated financial statements.

Insert this amount at AA on Worksheet 22: Inward investor (financial)'s step 4.

Statement worldwide equity is the amount of net assets for the period.

Refer to Section 820-933(2) of the ITAA 1997.

Step 4.3: Divide the amount at Z by the amount at AA. This is the worldwide gearing ratio.

Insert the result at BB on Worksheet 22: Inward investor (financial)'s step 4.

Dividing the worldwide debt by the worldwide equity establishes the worldwide gearing ratio.

Step 4.4: Add 1 (one) to the amount at BB (Step 5.3).

Insert the result at CC on Worksheet 22: Inward investor (financial)'s step 4.

Steps 4.4 and 4.5 convert the ratio to a fraction, which is later applied to the entity's net Australian investments.

Step 4.5: Divide the amount at BB by the amount at CC.

Insert the result at DD on Worksheet 22: Inward investor (financial)'s step 4.

 N/A

Step 4.6: Multiply the amount at DD by H.

Insert the result at EE on Worksheet 22: Inward investor (financial)'s step 4.

This applies the ratio, expressed as a fraction, to net Australian investments (H). This represents the net Australian investments funded by debt and equity, as calculated at H in Worksheet 18: Inward investor (financial)'s step 2.

Step 4.7: Add the average value of the entity’s zero capital amount ZC from Worksheet 18: Inward investor (financial)'s step 2 to the amount at EE.

Insert the amount at FF on Worksheet 22: Inward investor (financial)'s step 4.

 N/A

Step 4.8: If the entity does not have any associate entities that are an outward investing financial entity (non-ADI) or inward investor (financial), insert 0 (zero) at GG on Worksheet 22: Inward investor (financial)'s step 4.

Otherwise, calculate the average value of the entity's associate entity excess amount (refer to the method statement in section 820-920 of the ITAA 1997), insert the amount at GG on Worksheet 22: Inward investor (financial)'s step 4.

This increases the worldwide gearing debt amount by the average associate entity excess amount.

Note: If the entity does not have any associate entities that are outward investing financial entities (non-ADI) or inward investing financial entities (non-ADI), the average associate entity excess amount is zero.

Step 4.9: Calculate the entity's worldwide gearing debt amount by adding the amounts at FF and GG.

The worldwide gearing debt amount represents the fraction of net Australian investments, increased by any associate entity excess amount.