New Business Tax System (Thin Capitalisation) Act 2001 (162 of 2001)

Schedule 1   Thin capitalisation rules

Part 2   Consequential and other amendments

Income Tax Assessment Act 1997

16   After section 25-85

Insert:

25-90 Deduction relating to foreign exempt income

An *Australian entity can deduct an amount of loss or outgoing from its assessable income for an income year if:

(a) the amount is incurred by the entity in deriving income from a foreign source; and

(b) the income is exempt income under section 23AI, 23AJ or 23AK of the Income Tax Assessment Act 1936; and

(c) the amount is a cost in relation to a *debt interest issued by the entity that is covered by paragraph (1)(a) of the definition of debt deduction .