Income Tax Assessment Act 1997
CHAPTER 4
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INTERNATIONAL ASPECTS OF INCOME TAX
PART 4-5
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GENERAL
Division 820
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Thin capitalisation rules
Subdivision 820-E
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Thin capitalisation rules for inward investing entities (ADI)
Operative provisions
SECTION 820-405 820-405 Safe harbour capital amount
The entity ' s safe harbour capital amount for the income year is the result of applying the method statement in this section. Method statement
Step 1.(a) is attributable to the *Australian permanent establishments at or through which it carries on its banking business in Australia; but
(b) is not attributable to the *OB activities of the Australian permanent establishments.
Step 2.
View history note
Hide history noteSECTION 820-405 820-405 Safe harbour capital amount
The entity ' s safe harbour capital amount for the income year 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 that part of the *risk-weighted assets of the entity that:
Step 2.
Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .
Example:
The Global Bank is a foreign bank that carries on its banking business in Australia through a permanent establishment. The average value of its relevant risk-weighted assets is $140 million. Multiplying that amount by 6% results in $8.4 million, which is the safe harbour capital amount.
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