CHAPTER 4
-
INTERNATIONAL ASPECTS OF INCOME TAX
History
Chapter 4 inserted by No 162 of 2001.
PART 4-5
-
GENERAL
History
Part 4-5 inserted by No 162 of 2001.
Division 820
-
Thin capitalisation rules
History
Division 820 inserted by No 162 of 2001.
Subdivision 820-FB
-
Grouping branches of foreign banks and foreign financial entities with a consolidated group, MEC group or single Australian resident company
History
Subdiv 820-FB (heading) substituted by No 64 of 2005.
Subdiv 820-FB inserted by No 117 of 2002. For application provision see Div 820 of the
Income Tax (Transitional Provisions) Act 1997
.
Effect of choice
SECTION 820-609
Effect on classification of head company or single company
820-609(1)
The *head company or single company is an
outward investing entity (ADI)
for a period (the
trial period
) that is all or part of the grouping period if:
(a)
apart from this Subdivision, the head company or single company would be an *outward investing entity (ADI) for the trial period; or
(b)
apart from this Subdivision, the head company or single company:
(i)
would be an
*
outward investing financial entity (non-ADI) for the trial period; and
(ii)
at least one of the
*
Australian permanent establishments is a
*
permanent establishment through which a
*
foreign bank carries on banking
*
business in Australia.
History
S 820-609(1) amended by No 23 of 2024, s 3 and Sch 2 item 89, by substituting para (b), effective 1 July 2024. For application provisions, see note under s
705-60
. Para (b) formerly read:
(b)
apart from this Subdivision, the head company or single company would be:
(i)
an *outward investing entity (non-ADI) and an *outward investor (financial) for the trial period; or
(ii)
an *outward investing entity (non-ADI) and an *outward investor (general) for the trial period;
and at least one of the *Australian permanent establishments is a *permanent establishment through which a *foreign bank carries on banking *business in Australia.
820-609(2)
The *head company is also an
outward investing entity (ADI)
for the trial period if, apart from this Subdivision:
(a)
section
820-585
would prevent the disallowance of a *debt deduction for the income year including the trial period; or
(b)
section
820-587
would apply Subdivision
820-D
to the head company as if it were an *outward investing entity (ADI) for the trial period.
History
S 820-609(2) amended by
No 164 of 2007
, s 3 and Sch 3 item 3, by substituting para (a), applicable to income years starting on or after 1 January 2004. Para (a) formerly read:
(a)
the head company would satisfy subsection
820-585(2)
for the trial period (triggering the exemption in section
820-585
); or
.
820-609(3)
The single company is also an
outward investing entity (ADI)
for the trial period if it is both a *foreign controlled Australian company and an *ADI for that period.
820-609(4)
The *head company or single company is an
inward investing entity (ADI)
for the trial period if:
(a)
apart from this Subdivision, it would be an *inward investment vehicle (financial), and not an *outward investing financial entity (non-ADI), for the trial period; and
(b)
at least one of the *Australian permanent establishments is a *permanent establishment through which a *foreign bank carries on banking *business in Australia.
History
S 820-609(4) amended by No 23 of 2024, s 3 and Sch 2 item 90, by substituting
"
*inward investment vehicle (financial), and not an *outward investing financial entity (non-ADI),
"
for
"
*inward investment vehicle (general) or an *inward investment vehicle (financial), and not an *outward investor (general) or an *outward investor (financial),
"
in para (a), effective 1 July 2024. For application provisions, see note under s
705-60
.
820-609(5)
The
*
head company or single company is an
outward investing financial entity (non-ADI)
for the trial period if, apart from this Subdivision:
(a)
it would be an
*
outward investing financial entity (non-ADI) for that period; and
(b)
at least one of the
*
Australian permanent establishments is a
*
permanent establishment of a
*
foreign entity that is a
*
financial entity; and
(c)
none of the Australian permanent establishments is a permanent establishment through which a
*
foreign bank carries on banking
*
business in Australia.
History
S 820-609(5) substituted by No 23 of 2024, s 3 and Sch 2 item 91, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-609(5) formerly read:
820-609(5)
The *head company or single company is an
outward investing entity (non-ADI)
and an
outward investor (financial)
for the trial period if, apart from this Subdivision, it would be an *outward investing entity (non-ADI) and:
(a)
an *outward investor (financial); or
(b)
an *outward investor (general);
for that period, and:
(c)
at least one of the *Australian permanent establishments is a *permanent establishment of a *foreign entity that is a *financial entity; and
(d)
none of the Australian permanent establishments is a permanent establishment through which a *foreign bank carries on banking *business in Australia.
820-609(6)
The
*
head company or single company is an
inward investing financial entity (non-ADI)
and an
inward investment vehicle (financial)
for the trial period if, apart from this Subdivision:
(a)
it would be an
*
inward investing financial entity (non-ADI) and an
*
inward investment vehicle (financial) for that period; and
(b)
it would not be an
*
outward investing financial entity (non-ADI) for that period; and
(c)
at least one of the
*
Australian permanent establishments is a
*
permanent establishment of a
*
foreign entity that is a
*
financial entity; and
(d)
none of the Australian permanent establishments is a permanent establishment through which a
*
foreign bank carries on banking
*
business in Australia.
History
S 820-609(6) substituted by No 23 of 2024, s 3 and Sch 2 item 91, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-609(6) formerly read:
820-609(6)
The *head company or single company is an
inward investing entity (non-ADI)
and an
inward investment vehicle (financial)
for the trial period if, apart from this Subdivision, it would be an *inward investing entity (non-ADI) and:
(a)
an *inward investment vehicle (financial); or
(b)
an *inward investment vehicle (general);
for that period and not an *outward investor (general) or an *outward investor (financial) for that period and:
(c)
at least one of the *Australian permanent establishments is a *permanent establishment of a *foreign entity that is a *financial entity; and
(d)
none of the Australian permanent establishments is a permanent establishment through which a *foreign bank carries on banking *business in Australia.
820-609(7)
This section has effect despite any other provision of this Division, except Subdivision
820-EA
and section
820-610
.
Note:
If the head company or single company is an outward investing financial entity (non-ADI) or inward investment vehicle (financial) under this section and satisfies subsection
820-430(5)
, it may choose under Subdivision
820-EA
to be treated as an outward investing entity (ADI). Section
820-603
affects whether the company satisfies that subsection, by treating as part of the company each relevant foreign financial entity's Australian permanent establishment.
History
S 820-609(7) amended by No 23 of 2024, s 3 and Sch 2 item 92, by substituting
"
investing financial entity (non-ADI)
"
for
"
investor (financial)
"
in the note, effective 1 July 2024. For application provisions, see note under s
705-60
.
S 820-609(7) amended by
No 164 of 2007
, s 3 and Sch 3 item 4, by inserting
"
and section 820-610
"
at the end, applicable to income years starting on or after 1 January 2004.
S 820-609 substituted by No 64 of 2005.
S 820-609 inserted by No 117 of 2002. For application provision see Div 820 of the
Income Tax (Transitional Provisions) Act 1997
.