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

Schedule 3   Thin Capitalisation: amendments taking effect on 1 July 2003

Part 1   Definition of equity capital and related concepts

Income Tax Assessment Act 1997

11   Subsection 995-1(1) (definition of equity capital )

Repeal the definition, substitute:

equity capital of an entity at a particular time means the total of the following as at that time:

(a) the issue price (however described) of each *equity interest in the entity that is still *on issue, reduced by so much (if any) of the issue price as remains unpaid;

(b) the entity's general reserves and asset revaluation reserves;

(c) the entity's retained earnings;

(d) the entity's net earnings (if any) for the current year, reduced by:

(i) the *tax the entity expects to pay in respect of those net earnings; and

(ii) so much of each distribution to the entity's *members that has been made or declared as at that time as is attributable to the entity's earnings for the current year;

(e) if the entity is a *corporate tax entity - provisions for *distributions of profit;

(f) if paragraph (e) does not apply - provisions for distributions to the entity's *members;

reduced by the total of the following as at that time:

(g) the entity's negative retained earnings (if any);

(h) the entity's net loss (if any) for the current year.