Income Tax Assessment Act 1997
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Hide history noteSECTION 820-190 Maximum allowable debt 820-190(1)
The entity ' s maximum allowable debt for an income year is the greatest of the following amounts: (a) the *safe harbour debt amount;
(b) (Repealed by No 23 of 2024) (c) unless subsection (2) applies to the entity - the *worldwide gearing debt amount.
Entities that are not eligible for the worldwide gearing debt amount
820-190(2)
This subsection applies to an entity, if: (a) the entity has *statement worldwide equity, or *statement worldwide assets, of nil or a negative amount; or (b) *audited consolidated financial statements for the entity for the income year do not exist; or (c) the result of applying the following formula is greater than 0.5:
| Average Australian assets of the entity | ||
| *Statement worldwide assets of the entity for the income year |
where:
(a) of an *Australian entity - is the average value, for the statement period mentioned in subsection (3) , of all the assets of the entity, other than:
(i) any *debt interests held by the entity, to the extent to which any value of the interests is all or a part of the *controlled foreign entity debt of the entity; or
(ii) any *equity interests or debt interests held by the entity, to the extent to which any value of the interests is all or a part of the *controlled foreign entity equity of the entity; and
(b) of a *foreign entity - is the average value, for the statement period mentioned in subsection (3) , of all the assets of the entity that are:
(i) located in Australia; or
(ii) attributable to the entity ' s *Australian permanent establishments; or
(iii) debt interests held by the entity, that were *issued by an *Australian entity and are *on issue;
(iv) equity interests held by the entity in an *Australian entity.
820-190(3)
For the purposes of the definition of average Australian assets in subsection (2) the statement period is the period for which the *audited consolidated financial statements for the entity for the income year have been prepared.
820-190(4)
For the purposes of the formula in paragraph (2)(c) , if: (a) an amount is included in *statement worldwide assets in respect of an asset; and (b) the asset was acquired, held or otherwise dealt with by an entity for a purpose (other than an incidental purpose) that included ensuring that subsection (2) does not apply to an entity; and (c) as a result of the acquisition, holding or dealing with of the asset, the amount included in statement worldwide assets exceeds the amount (including nil) that would otherwise be so included;
apply the amount of the excess to reduce statement worldwide assets (or statement worldwide assets as reduced by a previous application of this subsection).
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