Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-FB - Grouping branches of foreign banks and foreign financial entities with a consolidated group, MEC group or single Australian resident company  

Effect of choice

SECTION 820-603   General  

820-603(1)    

The choice cannot be revoked in relation to the grouping period. It binds the *head company or the single company, as appropriate, and the establishment entity.

820-603(2)    

The rest of this section applies:

(a) to each *Australian permanent establishment that:

(i) was an Australian permanent establishment of the establishment entity; and

(ii) if the establishment entity was a *foreign bank - was an Australian permanent establishment through which the entity carried on banking *business in Australia at any time in the grouping period; and

(b) in relation to each time (the test time ) that was in the grouping period and was when the Australian permanent establishment:

(i) was an Australian permanent establishment of the establishment entity; and

(ii) if the establishment entity was a foreign bank - was an Australian permanent establishment through which the entity carried on banking business in Australia.

820-603(3)    
In the case of a choice under section 820-597 , this Division (except Subdivision 820-FA , this Subdivision and Subdivision 820-L ) applies as if, at the test time, the *Australian permanent establishment:

(a) had been part of the *head company; and

(b) had not been part of the establishment entity; and

(c) were a *subsidiary member of the *consolidated group or *MEC group.

820-603(4)    
In the case of a choice under section 820-599 , this Division (except Subdivision 820-FA , this Subdivision and Subdivision 820-L ) applies as if, at the test time:

(a) the *Australian permanent establishment had been part of the single company and had not been part of the establishment entity; and

(b) the single company were a *consolidated group of which the single company was the *head company and the Australian permanent establishment was a *subsidiary member.

820-603(5)    
In either case, without limiting subsection (3) or (4), this Division (except Subdivision 820-FA , this Subdivision and Subdivision 820-L ) applies as if:

(a) the *Australian permanent establishment were an entity at that time; and

(b) each asset and liability of the establishment entity at the test time that is attributable to the Australian permanent establishment were an asset or liability of the Australian permanent establishment at that time; and

(c) without limiting paragraph (b) of this subsection, each cost that:

(i) is a *debt deduction of the establishment entity incurred at the test time; and

(ii) is attributable to the Australian permanent establishment;

were a cost incurred by the Australian permanent establishment at that time;

For the effects of disallowing debt deductions, see section 820-605 .

820-603(6)    

However, the application of this Division because of this section is subject to the modifications set out in sections 820-607 to 820-615 .

820-603(7)    
For the purposes of this Division (as applying because of this Subdivision), this Act (except this Division) applies as if the matters referred to in subsections (3), (4) and (5) of this section were the case.

Note:

For example, this means that a head company is treated for the purposes of this Division as if it had debt deductions based on the actual costs incurred by an Australian permanent establishment while it is treated as part of the head company because of this section.