Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-AA - Thin capitalisation rules for general class investors  

Operative provisions

SECTION 820-53   Meaning of group ratio, GR group, GR group parent and GR group member  

820-53(1)    
If an entity is a * GR group member for a period of a * GR group for the period, the entity ' s group ratio for the income year corresponding to the period is worked out as follows:

(a)    first, work out the * GR group net third party interest expense, for that period, of the GR group;

(b)    next, work out the * GR group EBITDA for that period of the GR group;

(c)    next, divide the result of paragraph (a) by the result of paragraph (b) .

If the result of paragraph (b) is zero, the entity ' s group ratio for the income year is zero.

Note:

The entity must keep records in accordance with section 820-985 if the entity works out a group ratio under this section.

820-53(2)    
A GR group , for a period, is:

(a)    if * audited consolidated financial statements for the period have been prepared for a worldwide parent entity (as described in subsection 820-935(6) ) - the group comprised of all of the following:

(i) the worldwide parent entity;

(ii) each other entity that is fully consolidated on a line-by-line basis in those audited consolidated financial statements; or

(b)    if paragraph (a) does not apply, and * global financial statements have been prepared for the period for a * global parent entity - the group comprised of all of the following:

(i) the global parent entity;

(ii) each other entity that is fully consolidated on a line-by-line basis in those global financial statements.

820-53(3)    
If paragraph (2)(a) applies:

(a)    the GR group parent for the period of the * GR group is the worldwide parent entity mentioned in that paragraph; and

(b)    each of the entities mentioned in that paragraph is a GR group member for the period of the * GR group.

820-53(4)    
If paragraph (2)(b) applies:

(a)    the GR group parent for the period of the * GR group is the * global parent entity mentioned in that paragraph; and

(b)    each of the entities mentioned in that paragraph is a GR group member for the period of the * GR group.