Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)

Schedule 1   Thin Capitalisation: amendments taking effect on 1 July 2001

Part 8   Associate entity debt

Income Tax Assessment Act 1997

32   Subsection 820-910(2)

Repeal the subsection, substitute:

(2) This section also applies, for the relevant entity, to an *associate entity (a relevant associate entity ) of the relevant entity, if:

(a) either:

(i) the associate entity is an *outward investing entity (non-ADI), an *inward investment vehicle (general), or an *inward investment vehicle (financial), for the relevant period; or

(ii) the associate entity is an *inward investor (general) or an *inward investor (financial) for the relevant period, and the condition in subsection (2A) of this section is satisfied; and

(b) neither section 820-35 ($250,000 debt deductions threshold) nor section 820-37 (exemption for entity with 90% Australian assets) prevents Subdivision 820-B, 820-C, 820-D or 820-E from disallowing any *debt deduction of the relevant associate entity for the income year; and

(c) for some or all of the relevant period, the relevant associate entity does not meet the conditions in subsection 820-39(3) (about exemption of certain special purpose entities); and

(d) the relevant associate entity is not an *exempt entity for the income year.

(2A) The condition referred to in subparagraph (2)(a)(ii) is that the relevant period consists of one or more periods each of which is either or both of these:

(a) a period throughout which the *associate entity carries on its *business in Australia at or through one or more of its *Australian permanent establishments;

(b) a period throughout which the associate entity holds any of the following assets:

(i) assets that are attributable to the associate entity's Australian permanent establishments;

(ii) other assets that are held for the purposes of producing the associate entity's assessable income.