Special rules apply to entities that are authorised deposit-taking institutions (ADIs) under the Banking Act 1959. Entities covered by these rules include Australian banks and foreign banks that carry on business in Australia through a permanent establishment – for example, a foreign bank branch.
Financial entities (non-ADI) that meet certain conditions can also choose to apply the ADI rules – see Electing to use the ADI rules for more information.
Provided certain conditions are satisfied, including where all the ADIs in the group are specialist credit card institutions, the head company of a consolidated or multiple entry consolidated group (MEC group) containing one or more ADIs is allowed to apply the thin capitalisation rules as if the group was a financial entity. For more information, see Choice to treat specialist credit card institutions as financial entities and not ADIs.
ADI outward investing entity and ADI inward investing entity explain how to apply the thin capitalisation rules to ADIs.