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INCOME TAX ASSESSMENT ACT 1997 - SECT 820.435

Conditions

  (1)   An entity satisfies this subsection for an income year if the average value, for that income year, of the entity's * on - lent amount is at least 80% of the average value, for that income year, of all the entity's assets.

  (2)   An entity satisfies this subsection for an income year if the first period that is all or part of that income year, and for which the entity would be treated in accordance with a choice under section   820 - 430, consists of one or more periods, each of which is either or both of these:

  (a)   a period throughout which the entity is a * financial entity because of paragraph   (d) of the definition of financial entity in subsection   995 - 1(1) (which covers licensed (or exempt) dealers in derivatives);

  (b)   a period throughout which:

  (i)   the entity is the * head company of a * consolidated group or * MEC group; and

  (ii)   at least one * member of the group is a financial entity because of that paragraph.

  (3)   An entity satisfies this subsection for an income year if it satisfies subsection   (2) and the amount worked out using this formula is greater than or equal to 0.8:

Start formula start fraction On-lent amount plus open bracket UG on derivatives minus UL on derivatives close bracket over Total assets minus UL on derivatives end fraction end formula

where:

"on-lent amount" means the average value, for that income year, of the entity's * on - lent amount.

"total assets" means the average value, for that income year, of all the entity's assets.

"UG on derivatives" means the average value, for that income year, of the entity's assets consisting of unrealised gains on trading derivatives within the meaning of Chapter   7 of the Corporations Act 2001 .

"UL on derivatives" means the lesser of:

  (a)   the average value, for that income year, of the entity's liabilities consisting of unrealised losses on trading derivatives within the meaning of Chapter   7 of the Corporations Act 2001 ; and

  (b)   the average value, for that income year, of the entity's assets consisting of unrealised gains on trading derivatives within the meaning of Chapter   7 of that Act.

On - lent amount increased for financial entity whose assets include precious metals

  (4)   In working out whether an entity satisfies subsection   (1) or (3) for an income year, the average value, for that income year, of the entity's * on - lent amount is increased by the average value, for that income year, of the entity's assets that consist of * precious metals, but only if the entity satisfies subsection   (5) for that income year.

  (5)   An entity satisfies this subsection for an income year if the first period that is all or part of that income year, and for which the entity would be treated in accordance with a choice under section   820 - 430, consists of one or more periods, each of which is either or both of these:

  (a)   a period throughout which the entity is a * financial entity;

  (b)   a period throughout which:

  (i)   the entity is the * head company of a * consolidated group or * MEC group; and

  (ii)   at least one * member of the group is a financial entity.


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