Private ruling: Application of the thin capitalisation regime of the Income Tax Assessment Act 1997 (ITAA 1997) and Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936)
Published: October 2013

Ruling: A5: No




Subject: Application of the thin capitalisation regime of the Income Tax Assessment Act 1997 (ITAA 1997) and Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936): The ruling is concerned with arm's length debt amount, recognition of intangible assets and revaluation of tangible assets under the thin capitalisation regime, as well as the application of | Part IVA of the ITAA 1936. The Commissioner has ruled on the following questions: | Issue 1 Question 1: Will your arm's length debt amount be AUD XXX for the purposes of section 820-105 of the ITAA 1997 for the relevant income year? | Issue 1 Question 2: Can your arm's length debt amount for the income years ended 31 December 2013 to 31 December 2016 be calculated solely based on an EBITDA interest cover of XXX pursuant to section 820-105 of the ITAA 1997? | Issue 2 Question: Can you use the PPA valuation for the purposes of recognising intangible assets under section 820-683 of the ITAA 1997? | Issue 3 Question: Can you use the PPA valuation for the purposes of revaluing property, plant and equipment under paragraph 820-680(1)(a) of the ITAA 1997? | Issue 4 Question: Will Part IVA of the ITAA 1936 apply to the interest deductions in respect of the newly borrowed funds under the safe harbour debt amount?