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INCOME TAX ASSESSMENT ACT 1997 - SECT 820.219

Worldwide gearing debt amount--inward investor (financial)

                   If the entity is an * inward investor (financial) for the income year, the worldwide gearing debt amount is the result of applying the method statement in this section.

Method statement

Step 1.   Divide the entity's * statement worldwide debt for the income year by the entity's * statement worldwide equity for that year.

Step 2.   Add 1 to the result of step 1.

Step 3.   Divide the result of step 1 by the result of step 2.

Step 4.   Multiply the result of step 3 in this method statement by the result of step 5 in the method statement in subsection 820-210(2).

Step 5.   Add to the result of step 4 the average value, for that year, of the entity's * zero-capital amount that has arisen because of the Australian investments mentioned in step 1 of the method statement in subsection 820-210(2).

Step 6.   Add to the result of step 5 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the worldwide gearing debt amount .

Example:    MSR Limited, a company that is not an Australian entity, has investments in Australia. MSR Limited has statement worldwide debt of $90 million and statement worldwide equity of $30 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 2 and 3) and multiplying the result by $100 million (which is the result of step 5 of the method statement in subsection 820-210(2)) equals $75 million. The zero-capital amount is $5 million. Adding that amount to $75 million results in $80 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $80 million.



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