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 820-613   How Subdivision 820-D applies  

820-613(1)    
This section has effect for the purposes of applying Subdivision 820-D to the *head company or single company in relation to a period (the test period ) that is all or part of the grouping period.

Note:

Subdivision 820-D applies to the head company or single company if it is classified as an outward investing entity (ADI) because of section 820-609 , either alone or in conjunction with a choice made by the company under section 820-430 .

Adjusted average equity capital

820-613(2)    

The *adjusted average equity capital of the *head company or single company for the test period is increased by the average value, for the period, of the amount worked out under subsection (3).

Note 1:

In the case of a choice under section 820-599 , paragraph 820-603(4)(b) treats the single company and the relevant Australian permanent establishments as a consolidated group.

Note 2:

To calculate an average value for the purposes of this Division, see Subdivision 820-G .

820-613(3)    

The amount worked out under this subsection as at a particular day is the total of the amounts worked out under the following paragraphs for each of the establishment entity ' s *Australian permanent establishments that section 820-603 treats as part of the *head company or single company on that day:

(a) so much of the establishment entity ' s *ADI equity capital, at the end of the day, as:

(i) is attributable to that Australian permanent establishment; and

(ii) has not been allocated to the *OB activities of the entity;

(b) the amounts that, as at the end of that day:

(i) are made available by the establishment entity to the Australian permanent establishment as loans to it; and

(ii) do not give rise to any *debt deductions of the entity for the income year or any other income year.

Note:

The amounts are to be worked out, so far as practicable, on the basis of the information that would be contained in a set of consolidated accounts. See section 820-611 .

Risk-weighted assets

820-613(4)    

For each of the establishment entity ' s *Australian permanent establishments that is covered by the choice, the *risk-weighted assets of the *head company or single company include that part of the entity ' s risk-weighted assets that:

(a) is attributable to that Australian permanent establishment; and

(b) is not attributable to the entity ' s *OB activities.