Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-C - Thin capitalisation rules for inward investing financial entities (non-ADI)  

Operative provisions

SECTION 820-217  

820-217   Worldwide gearing debt amount - inward investment vehicle (financial)  

If the entity is an *inward investment vehicle (financial) for the income year, and is not also an *outward investing financial entity (non-ADI) for all or any part of that year, the worldwide gearing debt amount is the result of applying the method statement in this section. Method statement

Example:

RGR Limited, a company that is an Australian entity, has a worldwide parent entity in France. RGR Limited has statement worldwide debt of $90 million and statement worldwide equity of $30 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 2 and 3) and multiplying the result by $100 million (which is the result of step 5 of the method statement in subsection 820-200(2) ) equals $75 million. The zero capital amount is $5 million. Adding that amount to $75 million results in $80 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $80 million.