S 820-95 repealed by No 23 of 2024, s 3 and Sch 2 item 42, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-95 formerly read:
SECTION 820-95 Safe harbour debt amount
-
outward investor (general)
820-95
If the entity is an *outward investor (general) for the income year, the
safe harbour debt amount
is the result of applying the method statement in this section. In applying the method statement, disregard any amount that is attributable to the entity
'
s *overseas permanent establishments.
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 *controlled foreign entity debt of the entity.
Step 5.
Reduce the result of step 4 by the average value, for that year, of all the *controlled foreign entity equity of the entity.
Step 6.
Reduce the result of step 5 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 7.
Multiply the result of step 6 by
⅗
.
Step 8.
Add to the result of step 7 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:
AK Pty Ltd, a company that is an Australian entity, has an average value of assets (other than assets attributable to its overseas permanent establishments) of $100 million.
The average values of its excluded equity interests, associate entity debt, associate entity equity, controlled foreign entity debt, controlled foreign entity equity and non-debt liabilities are $5 million, $10 million, $8 million, $5 million, $2 million and $5 million respectively. Deducting these amounts from the result of step 1 (through applying steps 1A to 6) leaves $65 million. Multiplying $65 million by
⅗
results in $39 million. As the average value of the company
'
s associate entity excess amount is $4.5 million, the safe harbour debt amount is therefore $43.5 million.
S 820-95 amended by No 110 of 2014, s 3 and Sch 1 items 1 and 24, by substituting
"
⅗
"
for
"
¾
"
in method statement, step 7 and substituting the example, applicable to assessments for income years starting on or after 1 July 2014. The example formerly read:
Example:
AK Pty Ltd, a company that is an Australian entity, has an average value of assets (other than assets attributable to its overseas permanent establishments) of $100 million.
The average values of its relevant associate entity debt, associate entity equity, controlled foreign entity debt, controlled foreign entity equity and non-debt liabilities are $10 million, $8 million, $5 million, $2 million and $5 million respectively. Deducting these amounts from the result of step 1 (through the application of steps 2 to 6) leaves $70 million. Multiplying $70 million by
¾
results in $52.5 million. As the average value of the company
'
s associate entity excess amount is $4.5 million, the safe harbour debt amount is therefore $57 million.
S 820-95 amended by No 142 of 2003, No 53 of 2002 and inserted by No 162 of 2001.
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