S 820-195 repealed by No 23 of 2024, s 3 and Sch 2 item 62, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-195 formerly read:
SECTION 820-195 Safe harbour debt amount
-
inward investment vehicle (general)
820-195
If the entity is an *inward investment vehicle (general) for the income year, the
safe harbour debt amount
is the result of applying the method statement in this section.
Method statement
Step 1.
Work out the average value, for the income year, of all the assets of the entity.
Step 1A.
Reduce the result of step 1 by the average value, for that year, of all the *excluded equity interests in the entity.
Step 2.
Reduce the result of step 1A by the average value, for that year, of all the *associate entity debt of the entity.
Step 3.
Reduce the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity.
Step 4.
Reduce the result of step 3 by the average value, for that year, of all the *non-debt liabilities of the entity. If the result of this step is a negative amount, it is taken to be nil.
Step 5.
Multiply the result of step 4 by
⅗
.
Step 6.
Add to the result of step 5 the average value, for that year, of the entity
'
s *associate entity excess amount. The result of this step is the
safe harbour debt amount
.
Example:
ALWZ Ltd, a company that is an Australian entity, has an average value of assets of $100 million.
The average values of its excluded equity interests, associate entity debt, associate entity equity and non-debt liabilities are $5 million, $10 million, $5 million and $5 million respectively. Deducting these amounts from the result of step 1 (through applying steps 1A to 4) leaves $75 million. Multiplying $75 million by
⅗
results in $45 million. As the average value of the company
'
s associate entity excess amount is $2 million, the safe harbour debt amount is therefore $47 million.
S 820-195 amended by No 110 of 2014, s 3 and Sch 1 items 3 and 35, by substituting
"
⅗
"
for
"
¾
"
in method statement, step 5 and substituting the example, applicable to assessments for income years starting on or after 1 July 2014. The example formerly read:
Example:
ALWZ Ltd, a company that is an Australian entity, has an average value of assets of $100 million.
The average values of its associate entity debt, associate entity equity and non-debt liabilities are $10 million, $5 million and $5 million respectively. Deducting these amounts from the result of step 1 (through applying steps 2 to 4) leaves $80 million. Multiplying $80 million by
¾
results in $60 million. As the average value of the company
'
s associate entity excess amount is $2 million, the safe harbour debt amount is therefore $62 million.
S 820-195 amended by No 142 of 2003 and inserted by No 162 of 2001.
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