INCOME TAX ASSESSMENT ACT 1997 (ARCHIVE)

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-F - Thin capitalisation rules for resident TC groups  

Operative provisions

SECTION 820-460 (ARCHIVE)   Application  

820-460(1)    
This Subdivision modifies how this Division applies to:

(a) each entity in a *resident TC group for an income year; and

(b) each *foreign bank of which an *Australian permanent establishment is in the group.

820-460(2)    
However, it does so only if:

(a) the group is one of these for the income year (because of section 820-550 ):

(i) an *outward investor (general);

(ii) an *outward investor (financial);

(iii) an *inward investment vehicle (general);

(iv) an *inward investment vehicle (financial);

(v) an *outward investing entity (ADI); or

(b) section 820-555 prevents this Division (except this Subdivision) from applying to any entity in the group for the income year (because the group is headed by a foreign-controlled Australian ADI); or

(c) section 820-565 applies Subdivision 820-D to the group for the income year as if the group were an outward investing entity (ADI); or

(d) section 820-575 applies Subdivision 820-E to the group for the income year as if the group were an inward investing entity (ADI).

Note:

This Subdivision does not affect:

• how this Division applies to entities that are not in a resident TC group, even if they are members of the same wholly-owned group as an entity that is in a resident TC group; or

• how this Division applies to entities that are in a resident TC group that is not covered by any of paragraphs (2)(a) to (d).

820-460(3)    
This Division (except this Subdivision) applies to each entity in the group as if:

(a) the group had been a company throughout the income year; and

(b) each entity in the group had been a division or part of that company, rather than a separate entity, at all times during the income year when the entity was in the group; and

(c) without limiting paragraph (b), each *debt deduction, for the income year, of each entity in the group were a debt deduction of the group (even if it was incurred at a time when the entity was not in the group);

but with the modifications set out in sections 820-550 to 820-575 .

Note:

To work out the times during the income year when the entity was in the group, see section 820-530 .

820-460(3A)    
This Division (except this Subdivision) does not apply to an entity in the group except as mentioned in subsection (3).

820-460(4)    
If an *Australian permanent establishment of a *foreign bank is in the group, this Division (except this Subdivision) applies as if:

(a) at all times when it was in the group during the income year, the Australian permanent establishment had been a division or part of the group; and

(b) the Australian permanent establishment had been a division or part of the foreign bank at no time during the income year; and

(c) without limiting paragraph (a) or (b), each deduction that:

(i) is a *debt deduction of the foreign bank for the income year; and

(ii) is attributable to the Australian permanent establishment;

were a debt deduction of the group (even if it was incurred at a time when the Australian permanent establishment was not in the group);

but with the modifications set out in sections 820-550 to 820-575 .

Note:

To work out the times during the income year when the Australian permanent establishment was in the group, see section 820-530 .

820-460(5)    
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) and (4) of this section were the case.

Note:

This means that the group is treated for the purposes of this Division as if it had debt deductions for the income year, based on the actual costs incurred by the entities and Australian permanent establishments that are treated as divisions or parts under subsections (3) and (4).