Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 815 - Cross-border transfer pricing  

Subdivision 815-B - Arm ' s length principle for cross-border conditions between entities  

Operative provisions

SECTION 815-140   Modification for thin capitalisation  

815-140(1)    
This section modifies the way an entity to which section 815-115 applies works out its taxable income, or its loss of a particular *sort, for an income year, if:

(a)    Division 820 (about thin capitalisation) applies to the entity for the income year; and

(aa)    

the entity:

(i) is not a *general class investor in relation to the income year; and

(ii) has not made a choice under subsection 820-85(2C) or 820-185(2C) in relation to the income year; and

(b)    the *arm ' s length conditions affect costs that are *debt deductions of the entity for the income year.

815-140(2)    
If working out what those costs would be if the *arm ' s length conditions had operated involves applying a rate to a *debt interest:

(a)    work out the rate as if the arm ' s length conditions had operated; but

(b)    apply the rate to the debt interest the entity actually issued.

Note:

Division 820 may apply to reduce or further reduce debt deductions.