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

42   Subsection 820-210(3) (example)

Repeal the example, substitute:

Example: FXS Financial SA is a company that is not an Australian entity. The average value of its Australian investments is $120 million.

The average value of its relevant excluded equity interests, associate entity equity, non-debt liabilities and on-lent amount are $5 million, $2 million, $3 million and $35 million respectively. Deducting those amounts from the result of step 1 (through applying steps 1A to 4) leaves $75 million. Multiplying $75 million by 3/5 results in $45 million. Adding the average on-lent amount of $35 million results in $80 million. Reducing the result of step 6 by the associate entity debt amount of $5 million results in $75 million. As the company does not have any associate entity excess amount, the adjusted on-lent amount is therefore $75 million.