Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (23 of 2024)

Schedule 2   Thin capitalisation

Part 1   Amendments

Income Tax Assessment Act 1997

9   After section 705-110

Insert:

705-112 If joining entity transfers a FRT disallowed amount to the head company - step 6A in working out allocable cost amount

(1) For the purposes of step 6A in the table in section 705-60, the step 6A amount is worked out by multiplying the sum of the *FRT disallowed amounts mentioned in subsection (2) by the *corporate tax rate.

(2) The *FRT disallowed amounts are the joining entity's FRT disallowed amounts that:

(a) did not accrue to the joined group before the joining time (see subsection (3)); and

(b) are transferred to the *head company under section 820-590; and

(c) are not cancelled under section 820-592;

to the extent that they were not applied by the joining entity under paragraph 820-56(2)(b) in respect of the income year in which the joining time occurred or any earlier income year.

(3) For the purposes of subsection (2), a *FRT disallowed amount accrued to the joined group before the joining time if and to the extent that, assuming that as it arose it were instead a profit that was accruing, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time.