Income Tax Assessment Act 1997
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View history noteChapter 4 inserted by No 162 of 2001.
Part 4-5 inserted by No 162 of 2001.
Division 820 inserted by No 162 of 2001.
Subdivision 820-D inserted by No 162 of 2001.
SECTION 820-310 Safe harbour capital amount 820-310(1)
The safe harbour capital amount is the result of applying the method statement in this section. Method statement
Step 1.
Work out the average value, for the income year, of all the entity ' s:
that are attributable to none of the following:
Step 2.
Multiply the result of step 1 by 6%.
Step 3.
Add to the result of step 2 the average value, for that year, of all the *tier 1 prudential capital deductions for the entity, to the extent that they are not attributable to:
Note:
Paragraph 5.3 of that accounting standard applies to any excess of the net market values of an interest in a subsidiary over the net amount of that subsidiary ' s assets and liabilities.
The result of this step is the safe harbour capital amount .
Example:
The Southern Cross Bank is an Australian bank that carries on its banking business through its overseas permanent establishments and through foreign entities that it controls. For the income year, its average value of risk-weighted assets and intangible assets comprising capitalised software expenses is $150 million (having discounted those assets that are excluded by step 1) and the average value of its relevant tier 1 prudential capital deductions is $2 million. Multiplying $150 million by 6% equals $9 million, which is the result of step 2. Adding $2 million to $9 million equals $11 million, which is the safe harbour capital amount.
S 820-310(1) amended by No 110 of 2014, s 3 and Sch 1 items 15 and 44, by substituting " 6% " for " 4% " in method statement, step 2 and substituting the example, applicable to assessments for income years starting on or after 1 July 2014. The example formerly read:
Example:
The Southern Cross Bank is an Australian bank that carries on its banking business through its overseas permanent establishments and through foreign entities that it controls. For the income year, its average value of risk-weighted assets and intangible assets comprising capitalised software expenses is $150 million (having discounted those assets that are excluded by step 1) and the average value of its relevant tier 1 prudential capital deductions is $2 million. Multiplying $150 million by 4% equals $6 million, which is the result of step 2. Adding $2 million to $6 million equals $8 million, which is the safe harbour capital amount.
S 820-310 amended by No 90 of 2010, s 3 and Sch 2 items 2 to 5, by inserting " (1) " before " The safe harbour capital amount is " , substituting all the words before paragraph (a) in step 1 of the method statement, substituting step 3 of the method statement and substituting " risk-weighted assets and intangible assets comprising capitalised software expenses is $150 million (having discounted those assets " for " risk-weighted assets is $150 million (having discounted those risk-weighted assets " in the example, applicable to assessments for each income year starting on or after 1 January 2009. The words before para (a) in step 1 and step 3 of the method statement formerly read:
Work out the average value, for the income year, of all the *risk-weighted assets of the entity, other than risk-weighted assets attributable to any of the following:
Step 3. ... Add to the result of step 2 the average value, for that year, of all the *tier 1 prudential capital deductions for the entity (to the extent that they are not attributable to any of the entity ' s *overseas permanent establishments or any *Australian controlled foreign entities of which the entity is an *Australian controller). The result of this step is the safe harbour capital amount .
820-310(2)
VBIF is the value of business in force at the time of acquisition of the relevant subsidiary (within the meaning of paragraph 5.3 of *accounting standard AASB 1038, as issued on 17 November 1998) of the entity.
S 820-310(2) inserted by No 90 of 2010, s 3 and Sch 2 item 6, applicable to assessments for each income year starting on or after 1 January 2009.
820-310(3)
*VBIF is taken to be nil at all times unless the value of VBIF at the time of acquisition of the relevant subsidiary was worked out by an *actuary according to Australian actuarial practice.
S 820-310(3) inserted by No 90 of 2010, s 3 and Sch 2 item 6, applicable to assessments for each income year starting on or after 1 January 2009.
S 820-310 inserted by No 162 of 2001.
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