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INCOME TAX ASSESSMENT ACT 1997 - SECT 880.205

Income from consular functions--non - assessable non - exempt income

    An amount of * ordinary income or * statutory income of an entity is not assessable income and is not * exempt income if the income arises from the entity's consular functions.

This Division applies to foreign controlled Australian entities, Australian entities that operate internationally and foreign entities that operate in Australia.

Financing expenses that an entity can otherwise deduct from its assessable income may be disallowed under this Division in the following circumstances:

  for an entity that is not an authorised deposit - taking institution for the purposes of the Banking Act 1959 (an ADI )--the entity's debt exceeds the prescribed level (and the entity is therefore "thinly capitalised");

  for an entity that is an ADI--the entity's capital is less than the prescribed level (and the entity is therefore "thinly capitalised").

This Subdivision sets out the thin capitalisation rules that apply to an Australian entity that has certain types of overseas investments and is not an authorised deposit - taking institution (an ADI ). These rules deal with the following matters:

  how to work out the entity's maximum allowable debt for an income year;

  how all or a part of the debt deductions claimed by the entity may be disallowed if the maximum allowable debt is exceeded;

  how to apply these rules to a period that is less than an income year.

Method statement

Step 1.   Work out the average value, for that year (the relevant year ), of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year.

Step 2.   Reduce the result of step 1 by the average value, for the relevant year, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for the relevant year, of all the * controlled foreign entity debt of the entity.

Step 4.   If the entity is a * financial entity throughout the relevant year, add to the result of step 3 the average value, for the relevant year, of the entity's * borrowed securities amount.

Step 5.   Add to the result of step 4 the average value, for the relevant year, of the * cost - free debt capital of the entity. The result of this step is the adjusted average debt .

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * controlled foreign entity debt of the entity.

Step 5.   Reduce the result of step 4 by the average value, for that year, of all the * controlled foreign entity equity of the entity.

Step 6.   Reduce the result of step 5 by the average value, for that year, of all the * non - debt liabilities of the entity. If the result of this step is a negative amount, it is taken to be nil.

Step 7.   Multiply the result of step 6 by 3 / 5 .

Step 8.   Add to the result of step 7 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the safe harbour debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * controlled foreign entity debt of the entity.

Step 5.   Reduce the result of step 4 by the average value, for that year, of all the * controlled foreign entity equity of the entity.

Step 6.   Reduce the result of step 5 by the average value, for that year, of all the * non - debt liabilities of the entity.

Step 7.   Reduce the result of step 6 by the average value, for that year, of the entity's * zero - capital amount. If the result of this step is a negative amount, it is taken to be nil.

Step 8.   Multiply the result of step 7 by 15 / 16 .

Step 9.   Add to the result of step 8 the average value, for that year, of the entity's * zero - capital amount.

Step 10.   Add to the result of step 9 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the total debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity equity of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * controlled foreign entity debt of the entity.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * controlled foreign entity equity of the entity.

Step 5.   Reduce the result of step 4 by the average value, for that year, of all the * non - debt liabilities of the entity.

Step 6.   Reduce the result of step 5 by the amount (the average on - lent amount ) which is the average value, for that year, of the entity's * on - lent amount (other than * controlled foreign entity debt of the entity). If the result of this step is a negative amount, it is taken to be nil.

Step 7.   Multiply the result of step 6 by 3 / 5 .

Step 8.   Add to the result of step 7 the average on - lent amount.

Step 9.   Reduce the result of step 8 by the average value, for that year, of all the * associate entity debt of the entity.

Step 10.   Add to the result of step 9 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the adjusted on - lent amount .

Method statement

Step 1.   Divide the average value of all the entity's * worldwide debt for the income year by the average value of all the entity's * worldwide equity for that year.

Step 3.   Add 1 to the result of step 1.

Step 4.   Divide the result of step 1 by the result of step 3.

Step 5.   Multiply the result of step 4 in this method statement by the result of step 6 in the method statement in section   820 - 95.

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 .

Method statement

Step 1.   Divide the average value of all the entity's * worldwide debt for the income year by the average value of all the entity's * worldwide equity for that year.

Step 3.   Add 1 to the result of step 1.

Step 4.   Divide the result of step 1 by the result of step 3.

Step 5.   Multiply the result of step 4 in this method statement by the result of step 7 in the method statement in subsection   820 - 100(2).

Step 6.   Add to the result of step 5 the average value, for that year, of the entity's * zero - capital amount (other than any zero - capital amount that is attributable to the entity's * overseas permanent establishments).

Step 7.   Add to the result of step 6 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 .

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 6 in the method statement in section   820 - 95.

Step 5.   Add to the result of step 4 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 .

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 7 in the method statement in subsection   820 - 100(2).

Step 5.   Add to the result of step 4 the average value, for that year, of the entity's * zero - capital amount (other than any zero - capital amount that is attributable to the entity's * overseas permanent establishments).

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 .

Method statement

Step 1.   Work out the average value, for that period, of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year.

Step 2.   Reduce the result of step 1 by the average value, for that period, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that period, of all the * controlled foreign entity debt of the entity.

Step 4.   If the entity is a * financial entity throughout that period, add to the result of step 3 the average value, for that period, of the entity's * borrowed securities amount.

Step 5.   Add to the result of step 4 the average value, for that period, of the * cost - free debt capital of the entity. The result of this step is the adjusted average debt .

This Subdivision sets out the thin capitalisation rules that apply to a foreign entity or a foreign controlled Australian entity that is not an authorised deposit - taking institution (an ADI ). These rules deal with the following matters:

  how to work out the entity's maximum allowable debt for an income year;

  how all or a part of the debt deductions claimed by the entity may be disallowed if the maximum allowable debt is exceeded;

  how to apply these rules to a period that is less than an income year.

Method statement

Step 1.   Work out the average value, for that year (the relevant year ), of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year.

Step 2.   Reduce the result of step 1 by the average value, for the relevant year, of:

  (a)   if the entity is an * inward investment vehicle (general) or an * inward investment vehicle (financial) for that year--all the * associate entity debt of the entity; or

  (b)   if the entity is an * inward investor (general) or an * inward investor (financial) for that year--all the associate entity debt of the entity, to the extent that it is attributable to the entity's * Australian permanent establishments.

Step 3.   If the entity is a * financial entity throughout the relevant year, add to the result of step 2 the average value, for the relevant year, of the entity's * borrowed securities amount.

Step 4.   Add to the result of step 3 the average value, for the relevant year, of the * cost - free debt capital of the entity. The result of this step is the adjusted average debt.

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * non - debt liabilities of the entity. If the result of this step is a negative amount, it is taken to be nil.

Step 5.   Multiply the result of step 4 by 3 / 5 .

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 safe harbour debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * non - debt liabilities of the entity.

Step 5.   Reduce the result of step 4 by the average value, for that year, of the entity's * zero - capital amount. If the result of this step is a negative amount, it is taken to be nil.

Step 6.   Multiply the result of step 5 by 15 / 16 .

Step 7.   Add to the result of step 6 the average value, for that year, of the entity's * zero - capital amount.

Step 8.   Add to the result of step 7 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the total debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all the assets of the entity.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity equity of the entity.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * non - debt liabilities of the entity.

Step 4.   Reduce the result of step 3 by the amount (the average on - lent amount ) which is the average value, for that year, of the entity's * on - lent amount. If the result of this step is a negative amount, it is taken to be nil.

Step 5.   Multiply the result of step 4 by 3 / 5 .

Step 6.   Add to the result of step 5 the average on - lent amount.

Step 7.   Reduce the result of step 6 by the average value, for that year, of all the * associate entity debt of the entity.

Step 8.   Add to the result of step 7 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the adjusted on - lent amount .

Method statement

Step 1.   Work out the average value, for the income year, of all of the following assets of the entity (the Australian investments ):

  (a)   assets that are attributable to the entity's * Australian permanent establishments;

  (b)   other assets that are held for the purposes of producing the entity's assessable income.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity that has arisen because of the Australian investments.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity that has arisen because of the Australian investments.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * non - debt liabilities of the entity that have arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.

Step 5.   Multiply the result of step 4 by 3 / 5 .

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 safe harbour debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all of the following assets of the entity (the Australian investments ):

  (a)   assets that are attributable to the entity's * Australian permanent establishments;

  (b)   other assets that are held for the purposes of producing the entity's assessable income.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity debt of the entity that has arisen because of the Australian investments.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * associate entity equity of the entity that has arisen because of the Australian investments.

Step 4.   Reduce the result of step 3 by the average value, for that year, of all the * non - debt liabilities of the entity that have arisen because of the Australian investments.

Step 5.   Reduce the result of step 4 by the average value, for that year, of the entity's * zero - capital amount that has arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.

Step 6.   Multiply the result of step 5 by 15 / 16 .

Step 7.   Add to the result of step 6 the average value, for that year, of the entity's * zero - capital amount that has arisen because of the Australian investments.

Step 8.   Add to the result of step 7 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the total debt amount .

Method statement

Step 1.   Work out the average value, for the income year, of all of the following assets of the entity (the Australian investments ):

  (a)   assets that are attributable to the entity's * Australian permanent establishments;

  (b)   other assets that are held for the purposes of producing the entity's assessable income.

Step 1A.   Reduce the result of step 1 by the average value, for that year, of all the * excluded equity interests in the entity.

Step 2.   Reduce the result of step 1A by the average value, for that year, of all the * associate entity equity of the entity that has arisen because of the Australian investments.

Step 3.   Reduce the result of step 2 by the average value, for that year, of all the * non - debt liabilities of the entity that has arisen because of the Australian investments.

Step 4.   Reduce the result of step 3 by the amount (the average on - lent amount ) which is the average value, for that year, of the * on - lent amount of the entity (to the extent that it is the value of all or a part of the Australian investments). If the result of this step is a negative amount, it is taken to be nil.

Step 5.   Multiply the result of step 4 by 3 / 5 .

Step 6.   Add to the result of step 5 the average on - lent amount.

Step 7.   Reduce the result of step 6 by the average value, for that year, of all the * associate entity debt of the entity that has arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.

Step 8.   Add to the result of step 7 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the adjusted on - lent amount .

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 4 in the method statement in section   820 - 195.

Step 5.   Add to the result of step 4 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 .

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 - 200(2).

Step 5.   Add to the result of step 4 the average value, for that year, of the entity's * zero - capital amount.

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 .

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 4 in the method statement in section   820 - 205.

Step 5.   Add to the result of step 4 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 .

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 .

Method statement

Step 1.   Work out the average value, for that period, of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year.

Step 2.   Reduce the result of step 1 by the average value, for that period, of:

  (a)   if the entity is an * inward investment vehicle (general) or an * inward investment vehicle (financial) for that period--all the * associate entity debt of the entity; or

  (b)   if the entity is an * inward investor (general) or an * inward investor (financial) for that period--all the associate entity debt of the entity, to the extent that it is attributable to the entity's * Australian permanent establishments.

Step 3.   If the entity is a * financial entity throughout that period, add to the result of step 2 the average value, for that period, of the entity's * borrowed securities amount.

Step 4.   Add to the result of step 3 the average value, for that period, of the * cost - free debt capital of the entity. The result of this step is the adjusted average debt .

This Subdivision sets out the thin capitalisation rules that apply to an entity that is both an authorised deposit - taking institution (an ADI ) and an Australian entity that has certain types of overseas investments. These rules deal with the following matters:

  how to work out the entity's minimum capital amount for an income year;

  how all or a part of the debt deductions claimed by the entity may be disallowed if the minimum capital amount is not reached;

  how to apply these rules to a period that is less than an income year.

Method statement

Step 1.   Work out the average value, for the income year, of all the entity's:

  (aa)   * risk - weighted assets; and

  (ab)   intangible assets comprising capitalised software expenses;

  that are attributable to none of the following:

  (a)   the entity's * overseas permanent establishments;

  (b)   assets comprised by the * controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to the entity's overseas permanent establishments);

  (c)   assets for which * prudential capital deductions must be made by the entity (other than prudential capital deductions attributable to the entity's overseas permanent establishments).

Step 2.   Multiply the result of step 1 by 6%.

Step 3.   Add to the result of step 2 the average value, for that year, of all the * tier 1 prudential capital deductions for the entity, to the extent that they are not attributable to:

  (a)   any of the entity's * overseas permanent establishments; or

  (b)   any * Australian controlled foreign entities of which the entity is an * Australian controller; or

  (c)   any of the entity's goodwill or intangible assets which relate to the excess mentioned in paragraph   5.3 of * accounting standard AASB 1038, as issued on 17   November 1998, to the extent that the excess is referrable to * VBIF; or

  Note:   Paragraph   5.3 of that accounting standard applies to any excess of the net market values of an interest in a subsidiary over the net amount of that subsidiary's assets and liabilities.

  (d)   any of the entity's intangible assets comprising capitalised software expenses.

  The result of this step is the safe harbour capital amount .

Method statement

Step 1.   Work out the average value, for the income year, of all the * risk - weighted assets of the entity, other than risk - weighted assets attributable to any of the following:

  (a)   the entity's * overseas permanent establishments;

  (b)   assets comprised by the * controlled foreign entity equity of the entity;

  (c)   assets for which * prudential capital deductions must be made by the entity.

Step 3.   Multiply the result of step 1 by the entity's worldwide group capital ratio for that year (see subsection   (3)).

Step 4.   Add to the result of step 3 the average value, for that year, of all the * tier 1 prudential capital deductions for the entity (to the extent that they are not attributable to any of the entity's * overseas permanent establishments or to any * Australian controlled foreign entities of which the entity is an * Australian controller). The result of this step is the worldwide capital amount .

Method statement

Step 1.   Work out the average value, for the income year, of the tier 1 capital (within the meaning of the * prudential standards) of the consolidated group of which the entity is a member (within the meaning of those standards) in accordance with those standards.

Step 2.   Divide the result of step 1 by the average value, for that year, of the * risk - weighted assets of that group in accordance with the * prudential standards. The result is the worldwide group capital ratio .

This Subdivision applies to a foreign entity that is an authorised deposit - taking institution (an ADI ). These rules deal with the following matters:

  how to work out the entity's minimum capital amount for an income year;

  how all or a part of the debt deductions claimed by the entity may be disallowed if the minimum capital amount is not reached;

  how to apply these rules to a period that is less than an income year.

Method statement

Step 1.   Work out the average value, for the income year, of that part of the * risk - weighted assets of the entity that:

  (a)   is attributable to the * Australian permanent establishments at or through which it carries on its banking business in Australia; but

  (b)   is not attributable to the * OB activities of the Australian permanent establishments.

Step 2.   Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .

This Subdivision tells you:

  how to classify the head company of a consolidated group or MEC group (in terms of which Subdivision of this Division to apply to the head company); and

  how to apply this Division to the head company (including how the application is modified).

  (a)   the head company of a consolidated group or MEC group; or

  (b)   an Australian company that cannot consolidate;

Method statement

Step 1.   Work out the average value, for the test period, of the * head company's or single company's * risk - weighted assets.

Step 2.   Multiply the result of step 1 by 6%. The result of this step is the safe harbour capital amount .

Method statement

Step 1.   Work out the value of the particular matter as at the first day of that period .

Step 2.   Work out the value of the particular matter as at the last day of that period.

Step 3.   Add the results of steps 1 and 2.

Step 4.   Divide the result of step 3 by 2. The result of this step is the average value.

Method statement

Step 1.   Work out the value of the particular matter as at the first measurement day (see subsection   (3)).

Step 2.   Work out the value of the particular matter as at the second measurement day (see subsection   (3)).

Step 3.   Work out the value of the particular matter as at the third measurement day (see subsection   (3)).

Step 4.   Add the results of steps 1, 2 and 3.

Step 5.   Divide the result of step 4 by 3. The result of this step is the average value.

Method statement

Step 1.   Work out the value of the particular matter as at each of the following measurement days:

  (a)   the first day of the measurement period;

  (b)   the last day of each quarterly period of that income year (see subsection   (3)) that occurs during the measurement period (if any);

  (c)   the last day of the measurement period if it is not a day covered by paragraph   (b).

Step 2.   Add up those values.

Step 3.   Divide the result of step 2 by the number of measurement days. The result of this step is the average value.

Method statement

Step 1.   Work out the value of the particular matter as at each of the following measurement days:

  (a)   the first day of the measurement period;

  (b)   the last day of each regular interval for the measurement period (see subsection   (5));

  (c)   the last day of the measurement period if it is not a day mentioned in paragraph   (b).

Step 2.   Add up those values.

Step 3.   Divide the result of step 2 by the number of measurement days. The result of this step is the average value.

This Subdivision sets out rules about the following:

  the meaning of an Australian controller of a foreign entity (for the purpose of determining whether or not an entity is an outward investing entity (non - ADI) or outward investing entity (ADI));

  the meaning of a foreign controlled Australian entity (for the purpose of determining whether or not an entity is an inward investing entity (non - ADI));

  the method of working out the extent to which one entity is controlled by another entity for those purposes.

Method statement

Step 1.   Calculate the * TC control tracing interest that the top entity holds in the interposed entity at that time.

Step 2.   Multiply the result of step 1 by the * TC control tracing interest that the interposed entity holds in the company, trust or partnership at that time.

Method statement

Step 1.   Calculate the * TC control tracing interest that the top entity holds in the first of those interposed entities at that time.

Step 2.   Multiply the result of step 1 by the * TC control tracing interest that the first interposed entity holds in the next interposed entity (the second interposed entity ) at that time.

Step 3.   Multiply the result of step 2 by the * TC control tracing interest that the second interposed entity holds in the company, trust or partnership at that time.

Method statement

Step 1.   Calculate the * TC control tracing interest that the top entity holds in the first of those interposed entities at that time.

Step 2.   Multiply the result of step 1 by the * TC control tracing interest that the first interposed entity holds in the next interposed entity (the second interposed entity ) at that time.

Step 3.   Multiply the result of step 2 by the * TC control tracing interest that the second interposed entity holds in the next interposed entity at that time.

Step 4.   Continue this pattern of multiplying the result of the last multiplication by the * TC control tracing interest in the next interposed entity held by the preceding entity, ending with a multiplication by the TC control tracing interest held by the last interposed entity in the company, trust or partnership.

Method statement

Step 1.   Work out the premium excess amount (see subsection   (3)), as at that particular time, for an * associate entity of the relevant entity that is the issuer of an * equity interest or a * debt interest any value of which is all or a part of the relevant entity's * associate entity equity at that time.

Step 2.   Add to the result of step 1 the attributable safe harbour excess amount (see subsection   (4)) for that * associate entity as at that time.

Step 3.   Apply steps 1 and 2 to all such * associate entities of the relevant entity and add all the results that are positive amounts. The result of this step is the associate entity excess amount .

Method statement

Step 1.   Work out the value, as at that particular time, of all the * associate entity equity of the relevant entity that is attributable to the * associate entity (disregarding the value of any * debt interest * issued by the associate entity that is held by the relevant entity at that time).

Step 2.   Work out the value, as at that time, of all the * equity capital of the * associate entity that is attributable to * equity interests that the relevant entity holds in the associate entity at that time (except equity interests whose value is all or a part of the relevant entity's * controlled foreign entity equity at that time).

Step 3.   Reduce the result of step 1 by the result of step 2. However, if the result of step 2 is a negative amount, the result of step 2 is taken to be nil for the purpose of this step.

Step 4.   Multiply the result of step 3 by:

  (a)   15 / 16 if the * associate entity excess amount is applied for the purpose of working out the * total debt amount of the relevant entity for that period under subsection   820 - 100(2), 820 - 200(2) or 820 - 210(2) ; or

  (b)   3 / 5 if the associate entity excess amount is applied for the purpose of working out the * adjusted on - lent amount of the relevant entity for that period under subsection   820 - 100(3), 820 - 200(3) or 820 - 210(3); or

  (c)   3 / 5 if the associate entity excess amount is applied for the purpose of working out the * safe harbour debt amount of the relevant entity for that period under section   820 - 95, 820 - 195 or 820 - 205; or

  (d)   the result of step 4 of the method statement in subsection   (1) or (2) of section   820 - 110 (as appropriate) if the associate entity excess amount is applied for the purpose of working out the * worldwide gearing debt amount of the relevant entity for that period .

  The result of this step is the premium excess amount .

Method statement

Step 1.   Work out the * safe harbour debt amount of the * associate entity for the day during which that particular time occurs, as if:

  (a)   the associate entity were an * outward investing entity (non - ADI) or * inward investing entity (non - ADI), as appropriate, for the period consisting only of that day; and

  (b)   if the associate entity would otherwise be treated as an * outward investor (financial) for that day and the relevant entity is not a * financial entity throughout that day--the associate entity were an * outward investor (general) for that day; and

  (c)   if the associate entity would otherwise be treated as an * inward investment vehicle (financial) for that day and the relevant entity is not a financial entity throughout that day--the associate entity were an * inward investment vehicle (general) for that day; and

  (d)   if the associate entity would otherwise be treated as an * inward investor (financial) for that day and the relevant entity is not a financial entity throughout that day--the associate entity were an * inward investor (general) for that day.

Step 2.   Reduce the result of step 1 by the value of the * adjusted average debt of the * associate entity for that day as if it had been the kind of entity that it is taken to be under step 1 for that day. If the result of this step is a negative amount, it is taken to be nil.

Step 3.   Multiply the result of step 2 by the sum of:

  (a)   the value, as at that time, of all the * equity capital of the * associate entity that is attributable to the relevant entity at that time; and

  (b)   the value, as at that time, of all the * debt interests * issued by the associate entity that are covered by subsection   (5), and held by the relevant entity, at that time; and

  (c)   the value, as at that time, of all the debt interests issued by the associate entity that are covered by subsection   (6), and held by the relevant entity, at that time.

Step 4.   Divide the result of step 3 by the sum of:

  (a)   the value, as at that time, of all the * equity capital of the * associate entity; and

  (b)   the value, as at that time, of all the * debt interests * issued by the associate entity that are covered by subsection   (5) at that time; and

  (c)   the value, as at that time, of all the debt interests issued by the associate entity that are covered by subsection   (6) at that time.

Method statement

Step 1.   Work out the total value, as at that particular time, of all the assets of the entity that represent * debt interests that:

  (a)   are of a kind commonly dealt in by entities that carry on a * business of dealing in securities; and

  (b)   the entity has sold under a reciprocal purchase agreement (otherwise known as a repurchase agreement), sell - buyback arrangement or securities loan arrangement; and

  (c)   the entity has not yet repurchased under the agreement or arrangement.

Step 2.   Add to the result of step 1 the total value, as at that time, of all the * debt interests issued to the entity to which the following paragraphs apply at that time:

  (a)   the debt interests remain * on issue;

  (b)   each of the debt interests is a loan of money for which no fees, charges or other consideration for the purpose of enhancing the credit rating of the issuer of the interest has been paid or is payable to the entity, any of the entity's * associates or another entity that is a * foreign entity;

  (c)   each of the entities issuing the interests has the required credit rating for the interests concerned in accordance with subsections   (4) and (5).

Step 3.   Add to the result of step 2 the total value, as at that time, of all the * debt interests that are assets of the entity (whether they are debt interests issued to the entity or not) and to which the following paragraphs apply at that time:

  (a)   the risk weight of each of the debt interests is either 0% or 20% under the * prudential standards;

  (b)   the debt interests do not satisfy all of the paragraphs in step 2.

Step 3A .   Add to the result of step 3 the total value, as at that time, of all the assets of the entity, to the extent that they:

  (a)   consist of rights to the return of assets covered by subsection   (2A); and

  (b)   are covered by none of steps 1, 2 and 3.

Step 4.   Add to the result of step 3A the total value, as at that time, of all the * securitised assets that the entity has at that time if the entity is a * securitisation vehicle at that time (see subsections   (2) and (3)). The result is the zero - capital amount .

  (a)   an entity that carries on its business at or through its Australian permanent establishments;

  (b)   an arm's length debt amount or arm's length capital amount worked out under this Division.

  (a)   provides for certain entities (called foreign hybrids) that are treated as partnerships for the purposes of foreign income tax, but as companies for the purposes of tax within the meaning of this Act, to be treated as partnerships for the purposes of this Act; and

  (b)   applies special rules to the entities in addition to those that normally apply to partnerships.

Method statement

Step 1.   Work out the sum of the amounts or * market values of the contributions made by the partner to the * foreign hybrid that, as at the end of the income year:

  (a)   have not been repaid or returned to the partner; and

  (b)   have been contributed for at least 180 days, or are intended by the partner to remain contributed for at least 180 days.

Step 2.   Subtract the sum of the amounts of:

  (a)   all * limited recourse debts owed by the partner at the end of the income year, to the extent that the * borrowings concerned were for the purpose of enabling the partner to make contributions to the * foreign hybrid and the debts were secured by the partner's interest in the foreign hybrid; and

  (b)   all the partner's * foreign hybrid revenue loss amounts in respect of the foreign hybrid for previous income years, after any reduction under subsection   830 - 45(2); and

  (c)   all the partner's * foreign hybrid net capital loss amounts in relation to the partnership for previous income years, after any reduction under subsection   830 - 45(2); and

  (d)   all deductions allowed to the partner under subsection   830 - 50(2) or (3) in respect of the foreign hybrid for previous income years; and

  (e)   all * capital losses that, as a result of subsection   830 - 50(2) or (3), the partner made in respect of * CGT event K12 in respect of the foreign hybrid for previous income years.

Method statement

Step 1.   Work out what would have been the entity's * tax cost of the asset for the purposes of applying the * asset - based income tax regime as at the start of the hybrid year if it were not a * foreign hybrid in relation to the hybrid year.

Step 2.   Multiply the result of step 1 by:

  (a)   if the entity is a * foreign hybrid company in relation to the hybrid year--the percentage applicable to the partner under subsection   830 - 35(2); or

  (b)   if the entity is a * foreign hybrid limited partnership in relation to the hybrid year--the individual interest of the partner in the asset, expressed as a percentage of the interests of all of the partners in the asset.

Step 3.   If the partner paid a premium in respect of the * acquisition of its interest in the asset (see subsection   (2)), add the amount of the premium to the result of step 2. If the partner received a discount in respect of the acquisition (see subsection   (2)), subtract the amount of the discount from the result of step 2, but not to the extent that this would result in a negative amount.

  The result of step 3 is the partner's tax cost setting amount in respect of the asset.

Method Statement

Step 1.   Add up all the amounts paid by the partner before the start of the hybrid year for its * shares in the entity (if the entity was a company), or for its interests in the assets of the entity and in the entity (if the entity was a * limited partnership), that it held at the start of the hybrid year, and subtract all amounts received by the partner in respect of those shares or interests by way of reduction in capital of the entity.

Step 2.   Work out the amount that, if the capital of the entity had been distributed to its * shareholders on a winding - up or to its partners on a dissolution, at the end of the income year before the hybrid year, the partner could reasonably be expected to have received of the total distribution.

Step 3.   If the result of step 1 exceeds the result of step 2, the partner paid a premium for its interest in the asset. If the result of step 2 exceeds the result of step 1, the partner received a discount for its interest in the asset.

Step 4.   Work out the amount of the premium or discount using the formula:

Start formula start fraction Result of step 1 in the method statement in subsection (1) over Sum of results of step 1 in the method statement in subsection (1) for the partner for all the *foreign hybrids assets in relation to the *asset-based income tax regime end fraction times Excess mentioned in step 3 in the method statement in this subsection end formula

A "hybrid mismatch" arises if double non - taxation results from the exploitation of differences in the tax treatment of an entity or financial instrument under the laws of 2 or more countries.

There is double non - taxation if a deductible payment is not included in a tax base (this is called a deduction/non - inclusion mismatch), or if a payment gives rise to 2 deductions (this is called a deduction/deduction mismatch). Disallowing a deduction, or including an amount in assessable income, "neutralises" this tax advantage.

This Subdivision neutralises a hybrid financial instrument mismatch if it involves a deduction, or non - inclusion, in Australia.

A deduction/non - inclusion mismatch is a hybrid financial instrument mismatch if it is attributable to hybridity in the treatment of a financial instrument or an arrangement to transfer a financial instrument, and either the relevant parties are related or the mismatch arose under a structured arrangement.

There is also an integrity rule that covers payments that are made in lieu of hybrid payments.

This Subdivision has an extended application in relation to payments that are subject to concessional tax rates in a foreign country.

A hybrid financial instrument mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision   832 - H.

This Subdivision neutralises a hybrid payer mismatch if it involves a deduction, or non - inclusion, in Australia.

A deduction/non - inclusion mismatch is a hybrid payer mismatch if it is made by a hybrid payer, and the mismatch would not have arisen, or would have been less, if the payment had instead been made by an ungrouped entity. It is also a requirement that the relevant parties are in the same control group or the mismatch arose under a structured arrangement.

An entity is a hybrid payer if a payment it makes is disregarded for the purposes of the tax law of one country (resulting in non - inclusion), but is deductible for the purposes of the tax law of another country.

The neutralising amount for the hybrid payer mismatch is reduced by dual inclusion income.

A hybrid payer mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision   832 - H.

This Subdivision neutralises a reverse hybrid mismatch if it involves a deduction in Australia.

A deduction/non - inclusion mismatch is a reverse hybrid mismatch if it is made directly or indirectly to a reverse hybrid, and the mismatch would not have arisen, or would have been less, if the payment had instead been made directly to an investor in the reverse hybrid.

An entity is a reverse hybrid if it is transparent for the purposes of the tax law of the country in which it is formed, but non - transparent for the purposes of the tax law of the country in which investors in it are subject to tax (resulting in non - inclusion).

A reverse hybrid mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision   832 - H.

This Subdivision neutralises a branch hybrid mismatch if it involves a deduction in Australia (and the non - inclusion was not also in Australia).

A deduction/non - inclusion mismatch is a branch hybrid mismatch if it is made directly or indirectly to a branch hybrid, and the mismatch would not have arisen, or would have been less, if the residence country had not recognised the permanent establishment.

An entity is a branch hybrid in relation to a payment made to it if, for the purposes of the tax law of the country in which it is a resident, the payment is treated as being allocated to a permanent establishment in another country, but in the other country, the payment is treated as not being allocated to a permanent establishment in that country.

A branch hybrid mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision   832 - H.

This Subdivision neutralises a deducting hybrid mismatch if it involves a deduction in Australia.

A deduction/deduction mismatch is generally a deducting hybrid mismatch.

An entity is a deducting hybrid if a payment it makes is deductible for the purposes of the tax law of 2 countries.

However, unless the deducting hybrid is a dual resident, there are rules identifying which country is the primary response country. If Australia is not the primary response country, this Subdivision will not neutralise the deducting hybrid mismatch unless:

  (a)   the primary response country does not have hybrid mismatch rules; and

  (b)   the relevant parties are in the same control group, or the mismatch arose under a structured arrangement.

The neutralising amount for the deducting hybrid mismatch is reduced by dual inclusion income.

A deducting hybrid mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision   832 - H.

This Subdivision neutralises an imported hybrid mismatch. This mismatch is an integrity rule that applies when one or more entities are interposed between a hybrid mismatch and a country that has hybrid mismatch rules.

Identifying an imported hybrid mismatch involves testing whether a hybrid mismatch involving 2 foreign countries has been "imported" into Australia by a deduction. If so, there are priority rules that allocate the neutralisation of the mismatch between countries that have hybrid mismatch rules.

Income that is taxed in 2 countries is dual inclusion income. It can be applied to reduce the neutralising amount for the hybrid payer mismatch and the deducting hybrid mismatch.

This Subdivision modifies the concepts of "subject to Australian income tax" and "subject to foreign income tax" for the purposes of calculating dual inclusion income.

It also identifies which entities are able to apply dual inclusion income.

This Subdivision contains an integrity measure that disallows an Australian deduction for a payment of interest (or a payment of a similar character) made by an entity (the paying entity ) under a scheme to a foreign entity (the interposed foreign entity ). The deduction will be disallowed if certain conditions are satisfied, including that:

  (a)   the paying entity, the interposed foreign entity and another foreign entity (the ultimate parent entity ) are in the same Division   832 control group; and

  (b)   the payment is not subject to Australian income tax; and

  (c)   the highest rate of foreign income tax (the foreign country rate ) on the payment is 10% or less; and

  (d)   it is reasonable to conclude (having regard to certain matters) that the entity, or one of the entities, that entered into or carried out all or part of the scheme did so for a purpose including a purpose of enabling a deduction to be obtained in respect of the payment, and enabling foreign income tax to be imposed on the payment at a rate of 10% or less.

However, the deduction will not be disallowed if, assuming that the payment had been made directly to the ultimate parent entity:

  (a)   the rate of foreign income tax on the payment in the country of residence of the ultimate parent entity would be less than or equal to the foreign country rate; and

  (b)   the payment would not give rise to a hybrid mismatch of a particular kind.

This Division provides the rules to determine if you are liable to pay income tax in respect of certain Australian sourced income paid to you, or which you are entitled to receive.

The rules are relevant for foreign residents and certain other entities.

The income tax payable is a withholding tax. The associated withholding obligations are in the Taxation Administration Act 1953 .

Amounts on which there is a liability to pay withholding tax are non - assessable non - exempt income.

If you are a foreign resident you may be liable to pay income tax on certain amounts of Australian sourced net income (other than dividends, interest and royalties) of a withholding MIT that are either paid to you or to which you become entitled.

A beneficiary (other than a foreign pension fund) of a trust in the capacity of a trustee of another trust will not be liable to income tax on these amounts.

Amounts on which there is a liability to pay withholding tax are non - assessable non - exempt income.

If you are a foreign resident who is employed under a labour mobility program, you may be liable to pay income tax on the salary, wages etc. paid to you under that program.

Amounts on which there is a liability to pay the tax are non - assessable non - exempt income.

This Subdivision sets out rules about the taxation of some foreign residents (known as IMR entities) that invest into or through Australia.

Income and capital gains from IMR financial arrangements are not subject to Australian income tax. Deductions and capital losses from IMR financial arrangements are disregarded for the purposes of this Act.

A foreign resident can disregard a capital gain or loss unless the relevant CGT asset is a direct or indirect interest in Australian real property, or relates to a business carried on by the foreign resident through a permanent establishment in Australia.

Special rules apply for individuals who were Australian residents but have become foreign residents (see also Subdivision   104 - I) and for foreign resident beneficiaries of fixed trusts.

There are also rules dealing with what happens when a foreign resident becomes an Australian resident.

 

Commonwealth Coat of Arms of Australia

Income Tax Assessment Act 1997

No.   38, 1997

Compilation No.   248

Compilation date:   1 January 2024

Includes amendments:   Act No. 40, 2023, Act No. 61, 2023, Act No. 69, 2023, Act No. 101, 2023 and Act No. 103, 2023

Registered:   15 January 2024

This compilation is in 12 volumes

Volume 1:   sections   1 - 1 to 36 12 pt">- 55

Volume 2:   sections   40 - 1 to 67 - 30

Volume 3:   sections   70 - 1 to 121 12 pt">- 35

Volume 4:   sections   122 - 1 to 197 12 pt">- 85

Volume 5:   sections   200 - 1 to 253 - 15

Volume 6:   sections   275 - 1 to 313 12 pt">- 85

Volume 7:   sections   315 - 1 to 420 - 70

Volume 8:   sections   615 - 1 to 721 - 40

Volume 9:   sections   723 - 1 to 880 12p t">- 205

Volume 10:   sections   900 - 1 to 995 - 1

Volume 11:   Endnotes 1 to 3

Volume 12:   Endnote 4

Each volume has its own contents

About this compilation

This compilation

This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 January 2024 (the compilation date ).

The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.

Self - repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

Chapter   5--Administration

Part   5 - 30--Record - keeping and other obligations

Division   900--Substantiation rules

Guide to Division   900   1

900 - 1   What this Division is about

Subdivision   900 - A--Application of Division

900 - 5   Application of the requirements of Division   900

900 - 10   Substantiation requirement

900 - 12   Application to recipients and payers of certain withholding payments

Subdivision   900 - B--Substantiating work expenses

900 - 15   Getting written evidence

900 - 20   Keeping travel records

900 - 25   Retaining the written evidence and travel records

900 - 30   Meaning of work expense

900 - 35   Exception for small total of expenses

900 - 40   Exception for laundry expenses below a certain limit

900 - 45   Exception for work expense related to award transport payment

900 - 50   Exception for domestic travel allowance expenses

900 - 55   Exception for overseas travel allowance expenses

900 - 60   Exception for reasonable overtime meal allowance

900 - 65   Crew members on international flights need not keep travel records

Subdivision   900 - C--Substantiating car expenses

900 - 70   Getting written evidence

900 - 75   Retaining the written evidence and odometer records

Subdivision   900 - D--Substantiating business travel expenses

900 - 80   Getting written evidence

900 - 85   Keeping travel records

900 - 90   Retaining the written evidence and travel records

900 - 95   Meaning of business travel expense

Subdivision   900 - E--Written evidence

Guide to Subdivision   900 - E

900 - 100   What this Subdivision is about

Operative provisions

900 - 105   Ways of getting written evidence

900 - 110   Time limits

900 - 115   Written evidence from supplier

900 - 120   Written evidence of depreciating asset expense

900 - 125   Evidence of small expenses

900 - 130   Evidence of expenses considered otherwise too hard to substantiate

900 - 135   Evidence on a payment summary

Subdivision   900 - F--Travel records

Guide to Subdivision   900 - F

900 - 140   What this Subdivision is about

900 - 145   Purpose of a travel record

Operative provisions

900 - 150   Recording activities in travel records

900 - 155   Showing which of your activities were income - producing activities

Subdivision   900 - G--Retaining and producing records

Guide to Subdivision   900 - G

900 - 160   What this Subdivision is about

900 - 165   The retention period

Operative provisions

900 - 170   Extending the retention period if an expense is disputed

900 - 175   Commissioner may tell you to produce your records

900 - 180   How to comply with a notice

900 - 185   What happens if you don't comply

Subdivision   900 - H--Relief from effects of failing to substantiate

900 - 195   Commissioner's discretion to review failure to substantiate

900 - 200   Reasonable expectation that substantiation would not be required

900 - 205   What if your documents are lost or destroyed?

Subdivision   900 - I--Award transport payments

Guide to Subdivision   900 - I

900 - 210   What this Subdivision is about

Operative provisions

900 - 215   Deducting an expense related to an award transport payment

900 - 220   Definition of award transport payment

900 - 225   Substituted industrial instruments

900 - 230   Changes to industrial instruments applied for before 29   October 1986

900 - 235   Changes to industrial instruments solely referable to matters in the instrument

900 - 240   Deducting in anticipation of receiving award transport payment

900 - 245   Effect of exception in this Subdivision on exception for small total of expenses

900 - 250   Effect of exception in this Subdivision on methods of calculating car expense deductions

Part   5 - 35--Miscellaneous

Division   905--Offences

905 - 5   Application of the Criminal Code

Division   909--Regulations

909 - 1   Regulations

Chapter   6--The Dictionary

Part   6 - 1--Concepts and topics

Division   950--Rules for interpreting this Act

950 - 100   What forms part of this Act

950 - 105   What does not form part of this Act

950 - 150   Guides, and their role in interpreting this Act

Division   960--General

Subdivision   960 - B--Utilisation of tax attributes

960 - 20   Utilisation

Subdivision   960 - C--Foreign currency

960 - 49   Objects of this Subdivision

960 - 50   Translation of amounts into Australian currency

960 - 55   Application of translation rules

Subdivision   960 - D--Functional currency

Guide to Subdivision   960 - D

960 - 56   What this Subdivision is about

Operative provisions

960 - 59   Object of this Subdivision

960 - 60   You may choose a functional currency

960 - 61   Functional currency for calculating capital gains and losses on indirect Australian real property interests

960 - 65   Backdated startup choice

960 - 70   What is the applicable functional currency ?

960 - 75   What is a transferor trust ?

960 - 80   Translation rules

960 - 85   Special rule about translation--events that happened before the current choice took effect

960 - 90   Withdrawal of choice

Subdivision   960 - E--Entities

960 - 100   Entities

960 - 105   Certain entities treated as agents

Subdivision   960 - F--Distribution by corporate tax entities

960 - 115   Meaning of corporate tax entity

960 - 120   Meaning of distribution

Subdivision   960 - G--Membership of entities

960 - 130   Members of entities

960 - 135   Membership interest in an entity

960 - 140   Ordinary membership interest

Subdivision   960 - GP--Participation interests in entities

960 - 180   Total participation interest

960 - 185   Indirect participation interest

960 - 190   Direct participation interest

960 - 195   Non - portfolio interest test

Subdivision   960 - H--Abnormal trading in shares or units

960 - 220   Meaning of trading

960 - 225   Abnormal trading

960 - 230   Abnormal trading--5% of shares or units in one transaction

960 - 235   Abnormal trading--suspected 5% of shares or units in a series of transactions

960 - 240   Abnormal trading--suspected acquisition or merger

960 - 245   Abnormal trading--20% of shares or units traded over 60 day period

Subdivision   960 - J--Family relationships

Guide to Subdivision   960 - J

960 - 250   What this Subdivision is about

Operative provisions

960 - 252   Object of this Subdivision

960 - 255   Family relationships

Subdivision   960 - M--Indexation

Guide to Subdivision   960 - M

960 - 260   What this Subdivision is about

960 - 265   The provisions for which indexation is relevant

Operative provisions

960 - 270   Indexing amounts

960 - 275   Indexation factor

960 - 280   Index number

960 - 285   Indexation--superannuation and employment termination

960 - 290   Indexation--levy threshold for the major bank levy

Subdivision   960 - S--Market value

Guide to Subdivision   960 - S

960 - 400   What this Subdivision is about

Operative provisions

960 - 405   Effect of GST on market value of an asset

960 - 410   Market value of non - cash benefits

960 - 412   Working out market value using an approved method

960 - 415   Amounts that depend on market value

Subdivision   960 - T--Meaning of Australia

Guide to Subdivision   960 - T

960 - 500   What this Subdivision is about

Operative provisions

960 - 505   Meaning of Australia

Subdivision   960 - U--Significant global entities

Guide to Subdivision   960 - U

960 - 550   What this Subdivision is about

Operative provisions

960 - 555   Meaning of significant global entity

960 - 560   Meaning of global parent entity

960 - 565   Meaning of annual global income

960 - 570   Meaning of global financial statements

960 - 575   Meaning of notional listed company group

Division   961--Notional tax offsets

Subdivision   961 - A--Dependant (non - student child under 21 or student) notional tax offset

Guide to Subdivision   961 - A

961 - 1   What this Subdivision is about

Entitlement to the notional tax offset

961 - 5   Who is entitled to the notional tax offset

Amount of the notional tax offset

961 - 10   Amount of the dependant (non - student child under 21 or student) notional tax offset

961 - 15   Reduced amounts of the dependant (non - student child under 21 or student) notional tax offset

961 - 20   Reductions to take account of the dependant's income

Subdivision   961 - B--Dependant (sole parent of a non - student child under 21 or student) notional tax offset

Guide to Subdivision   961 - B

961 - 50   What this Subdivision is about

Operative provisions

961 - 55   Who is entitled to the notional tax offset

961 - 60   Amount of the dependant (sole parent of a non - student child under 21 or student) notional tax offset

961 - 65   Reductions to take account of change in circumstances

Division   974--Debt and equity interests

Subdivision   974 - A--General

Guide to Division   974   106

974 - 1   What this Division is about

974 - 5   Overview of Division

Operative provisions

974 - 10   Object

Subdivision   974 - B--Debt interests

974 - 15   Meaning of debt interest

974 - 20   The test for a debt interest

974 - 25   Exceptions to the debt test

974 - 30   Providing a financial benefit

974 - 35   Valuation of financial benefits--general rules

974 - 40   Valuation of financial benefits--rights and options to terminate early

974 - 45   Valuation of financial benefits--convertible interests

974 - 50   Valuation of financial benefits--value in present value terms

974 - 55   The debt interest and its issue

974 - 60   Debt interest arising out of obligations owed by a number of entities

974 - 65   Commissioner's power

Subdivision   974 - C--Equity interests in companies

974 - 70   Meaning of equity interest in a company

974 - 75   The test for an equity interest

974 - 80   Equity interest arising from arrangement funding return through connected entities

974 - 85   Right or return contingent on aspects of economic performance

974 - 90   Right or return at discretion of company or connected entity

974 - 95   The equity interest

Subdivision   974 - D--Common provisions

974 - 100   Treatment of convertible and converting interests

974 - 105   Effect of action taken in relation to interest arising from related schemes

974 - 110   Effect of material change

974 - 112   Determinations by Commissioner

Subdivision   974 - E--Non - share distributions by a company

974 - 115   Meaning of non - share distribution

974 - 120   Meaning of non - share dividend

974 - 125   Meaning of non - share capital return

Subdivision   974 - F--Related concepts

974 - 130   Financing arrangement

974 - 135   Effectively non - contingent obligation

974 - 140   Ordinary debt interest

974 - 145   Benchmark rate of return

974 - 150   Schemes

974 - 155   Related schemes

974 - 160   Financial benefit

974 - 165   Convertible and converting interests

Division   975--Concepts about companies

Subdivision   975 - A--General

975 - 150   Position to affect rights in relation to a company

975 - 155   When is an entity a controller (for CGT purposes) of a company?

975 - 160   When an entity has an associate - inclusive control interest

Subdivision   975 - G--What is a company's share capital account?

975 - 300   Meaning of share capital account

Subdivision   975 - W--Wholly - owned groups of companies

975 - 500   Wholly - owned groups

975 - 505   What is a 100% subsidiary?

Division   976--Imputation

976 - 1   Franked part of a distribution

976 - 5   Unfranked part of a distribution

976 - 10   The part of a distribution that is franked with an exempting credit

976 - 15   The part of a distribution that is franked with a venture capital credit

Division   977--Realisation events, and the gains and losses they realise for income tax purposes

CGT assets  

977 - 5   Realisation event

977 - 10   Loss realised for income tax purposes

977 - 15   Gain realised for income tax purposes

Trading stock  

977 - 20   Realisation event

977 - 25   Disposal of trading stock: loss realised for income tax purposes

977 - 30   Ending of an income year: loss realised for income tax purposes

977 - 35   Disposal of trading stock: gain realised for income tax purposes

977 - 40   Ending of an income year: gain realised for income tax purposes

Revenue assets  

977 - 50   Meaning of revenue asset

977 - 55   Loss or gain realised for income tax purposes

Division   980--Affordable housing

Guide to Division   980   162

980 - 1   What this Division is about

Subdivision   980 - A--Providing affordable housing

Operative provisions

980 - 5   Providing affordable housing

980 - 10   Eligible community housing providers

980 - 15   Affordable housing certificates

Part   6 - 5--Dictionary definitions

Division   995--Definitions

995 - 1   Definitions

Table of Subdivisions

  Guide to Division   900

900 - A   Application of Division

900 - B   Substantiating work expenses

900 - C   Substantiating car expenses

900 - D   Substantiating business travel expenses

900 - E   Written evidence

900 - F   Travel records

900 - G   Retaining and producing records

900 - H   Relief from effects of failing to substantiate

900 - I   Award transport payments


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