Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-G - Calculating the average values  

How to calculate the average values

SECTION 820-630   Methods of calculating average values  

Methods of calculation for entities that are not ADIs

820-630(1)    
An entity to which Subdivision 820-B or 820-C applies for a period that is all or a part of an income year must use one of the following methods to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application:

(a)    the method set out in section 820-635 (the opening and closing balances method );

(b)    the method set out in section 820-640 (the 3 measurement days method );

(c)    the method set out in section 820-645 (the frequent measurement method ). .

Note 1:

This subsection therefore applies only to an outward investing financial entity (non-ADI) or an inward investing financial entity (non-ADI).

Note 2:

An entity cannot apply the 3 measurement days method if it is unable to meet the requirements in subsection 820-640(1) . An entity ' s ability to apply that method may therefore be limited.

820-630(2)    
The entity must use the same method to calculate all such average values for that period for the purposes of that application.

Commissioner ' s power

820-630(3)    
If the entity fails to comply with subsection (2) , the Commissioner may, irrespective of the methods used by the entity, recalculate all the average values for the entity and that period by using the opening and closing balances method.

Method of calculation for ADIs

820-630(4)    
An entity to which Subdivision 820-D or 820-E applies for a period that is all or a part of an income year must use the frequent measurement method to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application.

Note:

This subsection therefore applies only to an outward investing entity (ADI) or an inward investing entity (ADI).