Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Act 2024 (23 of 2024)

Schedule 2   Thin capitalisation

Part 1   Amendments

Income Tax Assessment Act 1997

8B   After section 705-100

Insert:

705-102 FRT disallowed amounts accruing to joined group before joining time - step 5A in working out allocable cost amount

(1) For the purposes of step 5A in the table in section 705-60, the step 5A amount is the sum of all *FRT disallowed amounts of the joining entity that:

(a) had not been applied by the joining entity under paragraph 820-56(2)(b) for the income year in which the joining time occurred or any earlier income year; and

(b) accrued to the joined group before the joining time (see subsection (2) of this section).

(2) For the purposes of subsection (1), a *FRT disallowed amount accrued to the joined group before the joining time if and to the extent that, assuming that as it arose it were instead a profit that was accruing, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time.

(3) However, a *FRT disallowed amount is not to be taken into account under subsection (1) to the extent that it reduced the undistributed profits comprising the step 3 amount in the table in section 705-60.