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.
Subdiv 820-B heading amended by No 23 of 2024, s 3 and Sch 2 item 30, by inserting " financial " , effective 1 July 2024. For application provisions, see note under s 705-60 .
Subdiv 820-B inserted by No 162 of 2001.
SECTION 820-90 Maximum allowable debt
Entity is not also an inward investment vehicle (financial)
820-90(1)
The entity ' s maximum allowable debt for an income year is the greatest of the following amounts if the entity is not also an * inward investment vehicle (financial) for all or any part of that year: (a) the * safe harbour debt amount;
(b) (Repealed by No 23 of 2024) (c) unless the entity has * worldwide equity of nil or a negative amount - the * worldwide gearing debt amount.
S 820-90(1) amended by No 23 of 2024, s 3 and Sch 2 items 35 - 37, by omitting " an * inward investment vehicle (general) or " before " an * inward investment vehicle (financial) " and repealing para (b) and note 1 and 2, effective 1 July 2024. For application provisions, see note under s 705-60 . Para (b) and note 1 and 2 formerly read:
(b) the * arm ' s length debt amount;Note 1:
The safe harbour debt amount differs depending on whether the entity is an outward investor (general) or an outward investor (financial), see sections 820-95 and 820-100.
Note 2:
The worldwide gearing debt amount for an entity that is not also an inward investment vehicle (general) or an inward investment vehicle (financial) differs depending on whether the entity is an outward investor (general) or an outward investor (financial), see section 820-110.
S 820-90(1) amended by No 110 of 2014, s 3 and Sch 1 items 7 and 8, by inserting " nil or " in para (c) and substituting note 1 and 2 for the note, applicable to assessments for income years starting on or after 1 July 2014. The note formerly read:
Note:
The safe harbour debt amount and the worldwide gearing debt amount differ depending on whether the entity is an outward investor (general) or an outward investor (financial), see sections 820-95 , 820-100 and 820-110 .
S 820-90(1) amended by No 142 of 2003.
Entity is also an inward investment vehicle (financial)
820-90(2)
The entity ' s maximum allowable debt for an income year is the greatest of the following amounts if the entity is also an * inward investment vehicle (financial) for all or any part of that year: (a) the * safe harbour debt amount;
(b) (Repealed by No 23 of 2024) (c) unless subsection (3) applies to the entity - the * worldwide gearing debt amount.
S 820-90(2) amended by No 23 of 2024, s 3 and Sch 2 items 39 - 41, by omitting " an * inward investment vehicle (general) or " before " an * inward investment vehicle (financial) " and repealing para (b) and note 1 and 2, effective 1 July 2024. For application provisions, see note under s 705-60 . Para (b) and note 1 and 2 formerly read:
(b) the * arm ' s length debt amount;Note 1:
The safe harbour debt amount differs depending on whether the entity is an outward investor (general) or an outward investor (financial), see sections 820-95 and 820-100.
Note 2:
The worldwide gearing debt amount for an entity that is also an inward investment vehicle (general) or an inward investment vehicle (financial) differs depending on whether the entity is an outward investor (general) or an outward investor (financial), see section 820-111.
S 820-90(2) substituted by No 110 of 2014, s 3 and Sch 1 item 9, applicable to assessments for income years starting on or after 1 July 2014. S 820-90(2) formerly read:
Entity is also an inward investment vehicle (general) or inward investment vehicle (financial)
820-90(2)
The entity ' s maximum allowable debt for an income year is the greater of the following amounts if the entity is also an * inward investment vehicle (general) or an * inward investment vehicle (financial) for all or any part of that year:
(a) the * safe harbour debt amount;
(b) the * arm ' s length debt amount.Note:
The safe harbour debt amount differs depending on whether the entity is an outward investor (general) or an outward investor (financial), see sections 820-95 and 820-100 .
Inward investment vehicles that are not eligible for the worldwide gearing debt amount
820-90(3)
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:
average Australian assets
of an entity is the average value, for the statement period mentioned in subsection
(4)
, of all the assets of the entity, other than:
(a) any assets attributable to the entity ' s * overseas permanent establishments; or
(b) 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
(c) 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.
S 820-90(3) inserted by No 110 of 2014, s 3 and Sch 1 item 9, applicable to assessments for income years starting on or after 1 July 2014.
820-90(4)
For the purposes of the definition of average Australian assets in subsection (3) the statement period is the period for which the * audited consolidated financial statements for the entity for the income year have been prepared.
S 820-90(4) inserted by No 110 of 2014, s 3 and Sch 1 item 9, applicable to assessments for income years starting on or after 1 July 2014.
820-90(5)
For the purposes of the formula in paragraph (3)(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 (3) 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).
S 820-90(5) inserted by No 110 of 2014, s 3 and Sch 1 item 9, applicable to assessments for income years starting on or after 1 July 2014.
S 820-90 inserted by No 162 of 2001.
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