Tax and Superannuation Laws Amendment (2014 Measures No. 4) Act 2014 (110 of 2014)

Schedule 1   Thin capitalisation

Part 7   Consequential amendments

Income Tax Assessment Act 1997

39   Section 820-205 (example)

Repeal the example, substitute:

Example: RJ Corporation is a company that is not an Australian entity. The average value of its Australian investments is $100 million.

The average value of its relevant excluded equity interests, associate entity debt, associate entity equity and non-debt liabilities is $5 million, $10 million, $5 million and $5 million respectively. Deducting those amounts from the result of step 1 leaves $75 million. Multiplying $75 million by 3/5 results in $45 million. As the company does not have any associate entity excess amount, the safe harbour debt amount is therefore $45 million.