S 820-205 repealed by No 23 of 2024, s 3 and Sch 2 item 63, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-205 formerly read:
SECTION 820-205 Safe harbour debt amount
-
inward investor (general)
820-205
If the entity is an *inward investor (general) for the income year, the
safe harbour debt amount
is the result of applying the method statement in this section.
Method statement
Step 1.
Work out the average value, for the income year, of all of the following assets of the entity (the
Australian investments
):
(a) assets that are attributable to the entity's *Australian permanent establishments;
(b) other assets that are held for the purposes of producing the entity's assessable income.
Step 1A.
Reduce the result of step 1 by the average value, for that year, of all the *excluded equity interests in the entity.
Step 2.
Reduce the result of step 1A by the average value, for that year, of all the *associate entity debt of the entity that has arisen because of the Australian investments.
Step 3.
Reduce the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity that has arisen because of the Australian investments.
Step 4.
Reduce the result of step 3 by the average value, for that year, of all the *non-debt liabilities of the entity that have arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.
Step 5.
Multiply the result of step 4 by
⅗
.
Step 6.
Add to the result of step 5 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the
safe harbour debt amount
.
Example:
RJ Corporation is a company that is not an Australian entity. The average value of its Australian investments is $100 million.
The average value of its relevant excluded equity interests, associate entity debt, associate entity equity and non-debt liabilities is $5 million, $10 million, $5 million and $5 million respectively. Deducting those amounts from the result of step 1 leaves $75 million. Multiplying $75 million by
⅗
results in $45 million. As the company does not have any associate entity excess amount, the safe harbour debt amount is therefore $45 million.
S 820-205 amended by No 110 of 2014, s 3 and Sch 1 items 5 and 39, by substituting
"
⅗
"
for
"
¾
"
in method statement, step 5 and substituting the example, applicable to assessments for income years starting on or after 1 July 2014. The example formerly read:
Example:
RJ Corporation is a company that is not an Australian entity. The average value of its Australian investments is $100 million.
The average value of its relevant associate entity debt, associate entity equity and non-debt liabilities is $10 million, $5 million and $5 million respectively. Deducting those amounts from the result of step 1 leaves $80 million. Multiplying $80 million by
¾
results in $60 million. As the company does not have any associate entity excess amount, the safe harbour debt amount is therefore $60 million.
S 820-205 amended by No 142 of 2003 and inserted by No 162 of 2001.
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