Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This subsection disallows all or a part of each * debt deduction of an entity for an income year that is an amount incurred by the entity during a period that is a part of that year if, for that period:
(a) the entity is an * inward investing entity (ADI); and
(b) the entity's * average equity capital is less than its * minimum capital amount;
to the extent that the debt deduction:
(c) is attributable to an * Australian permanent establishment of the entity at or through which it carries on its banking business; and
(d) is not an * allowable OB deduction.
Note: To determine whether an entity is an inward investing entity (ADI) for that period, see subsection 820 - 395(2).
(2) The entity's average equity capital for that period is the sum of the following:
(a) the average value, for that period, of the * equity capital of the entity that:
(i) is attributable to its * Australian permanent establishments at or through which it carries on its banking business in Australia; but
(ii) has not been allocated to the * OB activities of the Australian permanent establishments;
(b) the average value, for that period, of the total amounts that:
(i) are made available by the entity to the Australian permanent establishments of the entity as loans to the Australian permanent establishments; and
(ii) do not give rise to any * debt deductions of the entity for that or any other income year.
(3) For the purposes of determining:
(a) the entity's * minimum capital amount for that period; and
(b) the amount of each * debt deduction to be disallowed;
sections 820 - 400 to 820 - 415 apply in relation to that entity and that period with the modifications set out in the following table:
Modifications of sections 820 - 400 to 820 - 415 | ||
Item | Provisions | Modifications |
1 | Sections 820 - 400 to 820 - 415 | A reference to an income year is taken to be a reference to that period |
2 | Section 820 - 415 | The reference to subsection 820 - 395(1) is taken to be a reference to subsection (1) of this section |
3 | Section 820 - 415 | average debt is taken to be the average value, for that period, of all the * debt capital of the entity that gives rise to its * debt deductions (other than * allowable OB deductions) for that year that are amounts incurred by the entity during that period average equity capital has the meaning given by subsection (2) of this section |