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

68   Section 820-220

Omit:

The amount of *debt deduction disallowed under subsection 820-185(1) is worked out using the following formula:

substitute:

(1) If subparagraph 820-185(1A)(b)(i) applies, the amount (the total disallowed amount ) disallowed under subsection 820-185(1) of the *debt deductions of an entity for an income year is the amount by which those debt deductions exceed the entity's *third party earnings limit for the income year (see section 820-427A).

Note: The disallowed amount also does not form part of the cost base of a CGT asset. See section 110-54.

(2) The amount by which a particular *debt deduction is disallowed as a result of subsection (1) is worked out as follows:

(a) first, divide the total disallowed amount by the *debt deductions of the entity for the income year;

(b) next, multiply the amount of the particular debt deduction by the result of paragraph (a).

(3) If subparagraph 820-185(1A)(b)(ii) applies, the amount of a *debt deduction of an entity for an income year disallowed under subsection 820-185(1) is worked out using the following formula: