This question ascertains if you have changed your entity status from general to financial during the income year.
The thin capitalisation provisions categorise non-ADI entities as either:
- a kind of financial entity (covered by code 2, 4, 6 or 10) or
- a kind of general entity (covered by code 1, 3, 5 or 9).
See the above table of thin capitalisation entity types.
If you have changed your entity type for thin capitalisation from general to financial during the income year, answer Yes at A item 33.
For more information about the different types of thin capitalisation entities, see the provisions in the Non-authorised deposit-taking institution (Non-ADI) table.
Question 34
This question seeks to ascertain your method for calculating average values.
At A item 34, write the code from the table below that represents the type of averaging method you used for calculating 'average values'.
Code |
Averaging method used |
|---|---|
1 |
Opening and closing balances method under section 820-635 |
2 |
Three measurement days method under section 820-640 |
3 |
Frequent measurement (quarterly) method under subsection 820-645(2) |
4 |
Frequent measurement (regular intervals) method under subsection 820-645(4) |
For more information about these methods or 'average values', see Division 820 of the ITAA 1997.
Question 35
This question requires information for all thin capitalisation entity types.
The dollar amounts or values asked for in this question are all based on your tax records.
You must complete all labels. However, if you have written code 7 or 8 (ADI) at A item 32 you do not need to complete D item 35.
At A item 35, write the total amount of your debt deductions for the income year that are allowable before applying the thin capitalisation provisions in Division 820 of the ITAA 1997.
At B item 35, write the amount of your debt deductions for any debt interest held or ultimately funded (via a back-to-back arrangement) by a non-resident person who is either a controller or majority owner of you, or is controlled or majority owned by the same persons as you (this includes majority ownership through other companies, partnerships or trusts). If none of the debt deductions shown at A item 35 were for debt interests held or ultimately funded by such non-resident entities, write 0 (zero) at B.
At C item 35, write the amount of your debt deductions that are disallowed for the income year under the following sections if you have written:
- code 1, 2, 9 or 10 at A item 32, the amount disallowed under sections 820-115 and 820-120
- code 3, 4, 5 or 6 at A item 32, the amount disallowed under sections 820-220 and 820-225
- code 7 at A item 32, the amount disallowed under sections 820-325 and 820-330
- code 8 at A item 32, the amount disallowed under sections 820-415 and 820-420.
At D item 35, write the amount of your adjusted average debt for the income year worked out under the following sections if you have written:
- code 1, 2, 9 or 10 at A item 32, under subsection 820-85(3)
- code 3, 4, 5 or 6 at A item 32, under subsection 820-185(3).
Question 36
This question requires information if you were an authorised deposit taking institution (ADI).
If you were an ADI for the income year and have written code 7 or 8 (ADI) at A item 32, answer Yes at A item 36 and complete the required fields.
If you have written code 1, 2, 3, 4, 5, 6, 9 or 10 (non-ADI) at A item 32 answer No at A.
If you have written code 7 (outward investing entity ADI) at A item 32 write the following amounts:
- At B, write the amount of your adjusted average equity capital worked out under subsection 820-300(3).
- At C, write your safe harbour capital amount determined under section 820-310. If you have calculated a safe harbour capital amount and relied on the arm’s length method or world-wide capital method, write the amount you calculated for the safe harbour capital amount at C.
- At D, write the amount by which your minimum capital amount determined under section 820-305 exceeds the amount of your adjusted average equity capital written at B.
- At E, write the amount of the average value of risk-weighted assets that you include in step 1 in section 820-310 (after excluding the value of risk-weighted assets attributable to the assets specified in paragraphs (a), (b) and (c) of step 1 in section 820-310).
- At F, write the amount of ADI equity capital attributable to your overseas permanent establishment(s) that you were required, under paragraph 820-300(3)(a), to subtract in determining the amount of adjusted average equity capital you had to write at B item 36.
- At G, write the amount of the average value of your total risk-weighted assets, used to work out your Tier 1 capital reported to APRA for your ADI group, attributable to your overseas permanent establishment(s) that you were required, under paragraph (a) of step 1 in section 820-310, to subtract in determining the amount of the average value of risk-weighted assets you had to write at E item 36.
- At H, write the amount of the average value of all your controlled foreign entity equity, within the meaning of section 820-890, that you were required, under paragraph 820-300(3)(b), to subtract in determining the amount of adjusted average equity capital you had to write at B item 36.
- At I, write the amount of tier 1 prudential capital deductions that you include in step 3 in section 820-310.
If you have written code 8 (inward investing entity ADI) at A item 32 write the following amounts:
- At B, write the amount of the average equity capital worked out under subsection 820-395(3).
- At C, write your safe harbour capital amount determined under section 820-405. If you have calculated a safe harbour capital amount and relied on the arm’s length method, write the amount you calculated for the safe harbour capital amount at C.
- At D, write the amount by which your minimum capital amount determined under section 820-400 exceeds the amount of your average equity capital written at B.
- At J, write the amount of the average value of all your risk weighted assets attributable to your Australian permanent establishments (but after excluding those assets which are attributable to offshore banking activities) that you include in step 1 of section 820-405.
- At K, write the amount of the average value of the total amounts you have made available to your Australian permanent establishments, that will never give rise to any debt deductions, that you are entitled to include, under paragraph 820-395(3)(b), in working out the amount of average equity capital you had to write at B item 36.