Income Tax Assessment Act 1997

s 820-315 — Arm’s length capital amount

(1) The arm’s length capital amount is a notional amount that, having regard to: (a) the factual assumptions set out in subsection (2); and (b) the relevant factors mentioned in subsection (3); would represent the minimum amount of * equity capital that the entity would reasonably be expected to have in carrying on the Australian business mentioned in subsection (2) throughout the income year if, throughout that year: (c) the part of the entity carrying on that business had operated as if it were a separate entity; and (d) that separate entity had been dealing at * arm’s length with: (i) the other part of the entity; and (ii) all the * Australian controlled foreign entities of which the entity is an * Australian controller. Note: The entity must keep records in accordance with section 820 ‑ 980 if the entity works out an amount under this section. Factual assumptions (2) Irrespective of what actually happened during that year, the following assumptions must be made in working out that minimum amount: (a) the entity’s commercial activities in connection with Australia (the Australian business ) during that year do not include: (i) any * business carried on by the entity at or through its * overseas permanent establishments; or (ii) the holding of any * controlled foreign entity equity; (b) the entity had carried on the Australian business that it actually carried on during that year; (c) the nature of the entity’s assets and liabilities (to the extent that they are attributable to the Australian business) had been as they were during that year; (d) except as mentioned in subsection (1), the entity had carried on the Australian business in the same circumstances as what actually existed during that year. Relevant factors (3) On the basis of the factual assumptions set out in subsection (2), the following factors must be taken into account in determining that minimum amount: (a) the functions performed, the assets used, and the risks assumed, throughout that year, by: (i) the entity; and (ii) the entity in relation to the Australian business; (b) the credit rating of the entity throughout that year, including the effect of that credit rating on all of the following: (i) the entity’s ability to borrow in relation to the Australian business; (ii) the interest rate at which the entity borrowed in relation to that business; (iii) the entity’s gross profit margin in relation to that business; (c) the capital ratios of the following throughout that year: (i) the entity; (ii) the entity in relation to the Australian business; (iii) each of the entity’s * associate entities that engage in commercial activities similar to the Australian business; (d) the purposes for which * schemes for * debt capital and for * equity capital had been actually entered into, throughout that year, by: (i) the entity; and (ii) the entity in relation to the Australian business; (e) the profit (within the meaning of the * accounting standards), and the return on capital, whether during that year or at any other time, of: (i) the entity; and (ii) the entity in relation to the Australian business; (f) the commercial practices adopted by independent parties dealing with each other at * arm’s length in the industry in which the entity carries on the Australian business throughout that year (whether in Australia or in comparable markets elsewhere); (g) the way in which the entity financed its business (other than the Australian business) throughout that year; (h) the general state of the Australian economy throughout that year; (i) any other factors which are specified in the regulations made for the purposes of this section. Commissioner’s power (4) If the Commissioner considers an amount worked out by the entity under this section does not appropriately take into account the factual assumptions and the relevant factors, the Commissioner may substitute another amount that the Commissioner considers better reflects those assumptions and factors.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 820-320 — Worldwide capital amount

(1) This section only applies if the entity is not also a * foreign controlled Australian entity throughout the income year. (2) The worldwide capital amount is the result of applying the method statement in this subsection. 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 . Example: Southern Cross Bank has an average value of risk ‑ weighted assets of $150 million (having discounted those risk ‑ weighted assets that are excluded by step 1) and the average value of its relevant tier 1 prudential capital deductions is $2 million. The entity’s worldwide group capital ratio is 0.0875. Multiplying $150 million by 0.0875 equals $13.125 million, which is the result of step 3. Adding that amount to the average value of the relevant tier 1 prudential capital deductions equals $15.125 million, which is the worldwide capital amount. Worldwide group capital ratio (3) The entity’s worldwide group capital ratio for the income year is the result of applying the method statement in this subsection. 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 . Example: For the Southern Cross Bank, the average value of the tier 1 capital for the relevant consolidated group is $14 million. Dividing $14 million by the group’s risk weighted assets of $160 million equals 0.0875, which is the worldwide group capital ratio.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 820-325 — Amount of debt deduction disallowed

The amount of * debt deduction disallowed under subsection 820 ‑ 300(1) is worked out using the following formula: where: average debt means the average value, for the income 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 (other than any debt capital that is attributable to any of the entity’s * overseas permanent establishments). capital shortfall means the amount by which the * adjusted average equity capital of the entity for that year (see subsection 820 ‑ 300(3)) is less than the entity’s * minimum capital amount for that year. debt deduction means each * debt deduction covered by subsection 820 ‑ 300(1). Note: The disallowed amount also does not form part of the cost base of a CGT asset. See section 110 ‑ 54.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-330 — Application to part year periods

(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 (to the extent that it is not attributable to an * overseas permanent establishment of the entity) if, for that period: (a) the entity is an * outward investing entity (ADI); and (b) the * adjusted average equity capital of the entity is less than the entity’s * minimum capital amount. Note: To determine whether an entity is an outward investing entity (ADI) for that period, see subsection 820 ‑ 300(2). (2) The entity’s adjusted average equity capital for that period is: (a) the average value, for that period, of all the * ADI equity capital of the entity (other than ADI equity capital attributable to any of its * overseas permanent establishments); minus (b) the average value, for that period, of all the * controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to any of its overseas permanent establishments). (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 ‑ 305 to 820 ‑ 325 apply in relation to that entity and that period with the modifications set out in the following table: Modifications of sections 820 ‑ 305 to 820 ‑ 325 Item Provisions Modifications 1 Sections 820 ‑ 305 to 820 ‑ 325 A reference to an income year is taken to be a reference to that period 2 Section 820 ‑ 325 A reference to subsection 820 ‑ 300(1) is taken to be a reference to subsection (1) of this section 3 Section 820 ‑ 325 adjusted average equity capital has the meaning given by subsection (2) of this section average debt is taken to be 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, to the extent that the debt capital is not attributable to any of the entity’s * overseas permanent establishments

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-390 — What this Subdivision is about

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. Table of sections Operative provisions 820 ‑ 395 Thin capitalisation rule for inward investing entities (ADI) 820 ‑ 400 Minimum capital amount 820 ‑ 405 Safe harbour capital amount 820 ‑ 410 Arm’s length capital amount 820 ‑ 415 Amount of debt deduction disallowed 820 ‑ 420 Application to part year periods

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-395 — Thin capitalisation rule for inward investing entities (ADI)

Thin capitalisation rule (1) This subsection disallows all or a part of each * debt deduction of an entity for an income year if, for that year: (a) the entity is an * inward investing entity (ADI) (see subsection (2)); and (b) the entity’s * average equity capital (see subsection (3)) is less than its * minimum capital amount (see section 820 ‑ 400); 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 1: This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $2 million or less, see section 820 ‑ 35. Note 2: To work out the amount to be disallowed, see section 820 ‑ 415. Note 3: For the rules that apply to an entity that is an inward investing entity (ADI) for part of an income year, see section 820 ‑ 420 in conjunction with subsection (2) of this section. Note 4: A consolidated group or MEC group may be an inward investing entity (ADI) to which this Subdivision applies: see Subdivision 820 ‑ FB. Inward investing entity (ADI) (2) The entity is an inward investing entity (ADI) for a period that is all or a part of an income year if, and only if, throughout that period, the entity is a * foreign bank that carries on its banking business in Australia at or through one or more of its * Australian permanent establishments. Note: The entity is required to keep certain records, see Subdivision 820 ‑ L. (2A) However, the entity is not an inward investing entity (ADI) for a period that is all or a part of an income year if it is a * general class investor for that year. (2B) Subsection (2A) does not apply for the purposes of subsection 820 ‑ 46(2) (definition of general class investor ). Average equity capital (3) The entity’s average equity capital for an income year is the sum of the following: (a) the average value, for that year, of the * ADI equity capital of the entity that: (i) is attributable to the * 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 year, 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. Note: To calculate an average value for the purposes of this Division, see Subdivision 820 ‑ G.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-400 — Minimum capital amount

The entity’s minimum capital amount for an income year is the lesser of the following amounts: (a) the * safe harbour capital amount; (b) the * arm’s length capital amount.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-405 — Safe harbour capital amount

The entity’s safe harbour capital amount for the income year is the result of applying the method statement in this section. 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 . Example: The Global Bank is a foreign bank that carries on its banking business in Australia through a permanent establishment. The average value of its relevant risk ‑ weighted assets is $140 million. Multiplying that amount by 6% results in $8.4 million, which is the safe harbour capital amount.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 820-410 — Arm’s length capital amount

(1) The arm’s length capital amount is a notional amount that, having regard to: (a) the factual assumptions set out in subsection (2); and (b) the relevant factors mentioned in subsection (3); would represent the minimum amount of * equity capital that the entity would reasonably be expected to have in carrying on the Australian business mentioned in subsection (2) throughout the income year if, throughout that year: (c) the part of the entity carrying on that business had operated as if it were a separate entity; and (d) that separate entity had been dealing at * arm’s length with the other part of the entity. Note: The entity must keep records in accordance with section 820 ‑ 980 if the entity works out an amount under this section. Factual assumptions (2) Irrespective of what actually happened during that year, the following assumptions must be made in working out that minimum amount: (a) the entity’s commercial activities in connection with Australia (the Australian business ) during that year consist only of banking business attributable to its * Australian permanent establishments (other than its * OB activities); (b) the entity had carried on the Australian business that it actually carried on during that year; (c) the nature of the entity’s assets and liabilities (to the extent that they are attributable to the Australian business) had been as they were during that year; (d) except as mentioned in subsection (1), the entity had carried on the Australian business in the same circumstances as what actually happened during that year. Relevant factors (3) On the basis of the factual assumptions set out in subsection (2), the following factors must be taken into account in determining that minimum amount: (a) the functions performed, the assets used, and the risks assumed, throughout that year, by: (i) the entity; and (ii) the entity in relation to the Australian business; (b) the credit rating of the entity throughout that year, including the effect of that credit rating on all of the following: (i) the entity’s ability to borrow in relation to the Australian business; (ii) the interest rate at which the entity borrowed in relation to that business; (iii) the entity’s gross profit margin in relation to that business; (c) the capital ratios of the following throughout that year: (i) the entity; (ii) the entity in relation to the Australian business; (iii) each of the entity’s * associate entities that engage in commercial activities similar to the Australian business; (d) the purposes for which * schemes for * debt capital and for * equity capital had been actually entered into, throughout that year, by: (i) the entity; and (ii) the entity in relation to the Australian business; (e) the profit (within the meaning of the * accounting standards or any other accounting standards that would otherwise apply to the entity), and the return on capital, whether during that year or at any other time, of: (i) the entity; and (ii) the entity in relation to the Australian business; (f) the commercial practices adopted by independent parties dealing with each other at * arm’s length in the industry in which the entity carries on the Australian business throughout that year (whether in Australia or in comparable markets elsewhere); (g) the general state of the Australian economy throughout that year; (h) any other factors which are specified in the regulations made for the purposes of this section. Commissioner’s power (4) If the Commissioner considers an amount worked out by the entity under this section does not appropriately take into account the factual assumptions and the relevant factors, the Commissioner may substitute another amount that the Commissioner considers better reflects those assumptions and factors.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15)

s 820-415 — Amount of debt deduction disallowed

The amount of * debt deduction disallowed under subsection 820 ‑ 395(1) is worked out using the following formula: where: average debt means the average value, for the income year, of all the * debt capital of the entity that gives rise to * debt deductions of the entity (other than * allowable OB deductions) for that or any other income year. capital shortfall means the amount by which the entity’s * average equity capital for that year (see subsection 820 ‑ 395(3)) is less than the entity’s * minimum capital amount for that year. debt deduction means each * debt deduction of the entity (other than * allowable OB deduction) for the income year. Note: The disallowed amount also does not form part of the cost base of a CGT asset. See section 110 ‑ 54.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-420 — Application to part year periods

(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

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-423 — What this Subdivision is about

This Subdivision sets out debt deduction limitation rules that apply to entities that are dealt with in rules set out in Subdivisions 820 ‑ AA, 820 ‑ B, 820 ‑ C, 820 ‑ D or 820 ‑ E. These rules deal with: (a) debt deductions in relation to the acquisition of CGT assets, or legal or equitable obligations, from associate pairs of the acquirer; and (b) debt deductions in relation to a financial arrangement that is entered into by an entity to fund etc. certain payments or distributions to one or more associate pairs of the entity. The rules in this Subdivision are applied before the rules set out in Subdivisions 820 ‑ AA, 820 ‑ B and 820 ‑ C. If a debt deduction of an entity is disallowed under this Subdivision, the debt deduction is disregarded for the purpose of applying those other Subdivisions (see section 820 ‑ 31). Table of sections Operative provisions 820 ‑ 423A Debt deduction limitation rule for debt deduction creation (all relevant entities) 820 ‑ 423AA Exceptions for acquisition of certain CGT assets 820 ‑ 423B Amount of debt deduction disallowed 820 ‑ 423C This Subdivision does not limit reduction of debt deductions other provisions 820 ‑ 423D Schemes relating to this Subdivision 820 ‑ 423E Modified meaning of associate pair 820 ‑ 423F Modified meaning of Australian entity

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423A — Debt deduction limitation rule for debt deduction creation (all relevant entities)

Debt deduction limitation rule (1) This subsection disallows all or part of a * debt deduction of an entity for an income year if, for that year: (a) the entity is any of the following for that year: (i) a * general class investor; (ii) an * outward investing financial entity (non ‑ ADI); (iii) an * inward investing financial entity (non ‑ ADI); and (aa) the entity is not a * securitisation vehicle; and (b) subsection (2) or (5) applies. Note 1: This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $2 million or less: see section 820 ‑ 35. Note 1A: This Subdivision does not apply to certain special purpose entities: see section 820 ‑ 39. Note 2: To work out the amount to be disallowed, see section 820 ‑ 423B. Acquisition of CGT asset, or legal or equitable obligation (2) This subsection applies if all of the following conditions are satisfied: (a) an entity (the acquirer ) * acquires a * CGT asset, or a legal or equitable obligation, either directly, or indirectly through one or more interposed entities , from one or more other entities (each of which is a disposer ); (b) one or more of the disposers (each of which is an associate disposer ) is an * associate pair of the acquirer; (c) the entity mentioned in subsection (1) (the relevant entity ) is: (i) the acquirer; or (ii) an associate pair of the acquirer; or (iii) an associate pair of an associate disposer; (d) the relevant entity’s * debt deduction mentioned in subsection (1) is, wholly or partly, in relation to any of the following: (i) the acquisition mentioned in paragraph (a) of this subsection; (ii) the acquirer’s holding of the CGT asset, or legal or equitable obligation; (e) the relevant entity’s debt deduction mentioned in subsection (1) is referable to an amount paid or payable, either directly or indirectly, to any of the following: (i) an associate pair of the relevant entity; (ii) an associate pair of the acquirer; (iii) an associate pair of an associate disposer; (f) the acquisition mentioned in paragraph (a) of this subsection is not covered by section 820 ‑ 423AA (which is about exceptions); (g) the relevant entity has not made a choice under subsection 820 ‑ 46(4) to use the third party debt test for the income year mentioned in subsection (1) of this section. (3) To avoid doubt, subsection (2) may apply more than once in relation to the * acquisition of a * CGT asset, or a legal or equitable obligation. (3A) For the purposes of subsection (2): (a) that subsection may apply in relation to an indirect * acquisition by an entity through one or more interposed entities even if an acquisition in the series is covered by section 820 ‑ 423AA (which is about exceptions); and (b) in determining whether an acquisition occurs indirectly through one or more interposed entities: (i) it is sufficient if acquisitions exist between each entity; and (ii) it is not necessary to demonstrate that each acquisition in a series of acquisitions happened before the next acquisition. Example: Entity A acquires a membership interest in Entity B that is covered by the exception in subsection 820 ‑ 423AA(1). Entity B later acquires, from Entity C, a CGT asset that is not covered by an exception in that section. There may be an indirect acquisition of the CGT asset by Entity A. (4) For the purposes of subsections (2), (3) and (3A), disregard paragraph (b) of the definition of “acquire” in subsection 995 ‑ 1(1). Financial arrangements involving associate pairs (5) This subsection applies if all of the following conditions are satisfied: (a) an entity (the payer ) enters into, or has a * financial arrangement with another entity; (b) the payer uses the financial arrangement to: (i) fund; or (ii) facilitate the funding of; one or more payments or distributions, of which one or more is a payment or distribution that, to an extent: (iii) the payer makes to an entity (an associate recipient ) that is an * associate pair of the payer; and (iv) is covered by subsection (5A) (which is about types of payments or distributions); (c) the entity mentioned in subsection (1) (the relevant entity ) is any of the following: (i) the payer; (ii) an associate pair of the payer; (iii) an associate pair of an associate recipient; (d) the relevant entity’s * debt deduction mentioned in subsection (1) is, wholly or partly, in relation to the financial arrangement mentioned in paragraph (a) of this subsection; (e) the relevant entity’s debt deduction is referable to an amount paid or payable, either directly or indirectly, to any of the following: (i) an associate pair of the relevant entity; (ii) an associate pair of the payer; (iii) an associate pair of an associate recipient; (f) the relevant entity has not made a choice under subsection 820 ‑ 46(4) to use the third party debt test for the income year mentioned in subsection (1) of this section. (5A) This subsection covers the following: (a) a * dividend, * distribution or * non ‑ share distribution; (b) a distribution by a trustee or partnership; (c) a return of capital, including a return of capital made by a distribution or payment made by a trustee or partnership; (d) a payment or distribution in respect of the cancellation or redemption of a * membership interest in an entity; (e) a * royalty, or a similar payment or distribution for the use of, or right to use, an asset; (f) a payment or distribution that is wholly or partly referable to the repayment of principal under a * debt interest if: (i) the debt interest is issued by the payer; and (ii) the debt interest is a * financial arrangement that satisfies paragraphs (5)(a), (b) and (c); (g) a payment or distribution of a kind similar to a payment or distribution mentioned in the preceding paragraphs; (h) a payment or distribution prescribed by the regulations. (6) For the purposes of paragraph (5)(b): (a) the payments or distributions mentioned in that paragraph may be made: (i) directly, or indirectly through one or more interposed entities (see subsection (7)); and (ii) before, at or after the time the payer enters into or has the * financial arrangement mentioned in paragraph (5)(a); and (b) a recipient may be the entity with whom the payer enters into or has the financial arrangement, or another entity. (7) For the purposes of subparagraph (6)(a)(i), in determining whether a payment or distribution is made indirectly through one or more interposed entities: (a) it is sufficient if payments exist between each interposed entity; and (b) it is not necessary to demonstrate that each payment in a series of payments funds the next payment, or is made after the previous payment.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423AA — Exceptions for acquisition of certain CGT assets

Acquisition of new membership interests in entities (1) For the purposes of paragraph 820 ‑ 423A(2)(f), the acquisition of a * CGT asset is covered by this section if: (a) the CGT asset is a * membership interest in: (i) an * Australian entity; or (ii) a * foreign entity that is a company; and (b) the membership interest has not previously been held by any entity. Acquisition of certain new depreciating assets (2) For the purposes of paragraph 820 ‑ 423A(2)(f), the acquisition of a * CGT asset is covered by this section if all of the following conditions are satisfied: (a) the CGT asset is a * depreciating asset other than an intangible asset; (b) an entity (the acquirer ) holds the CGT asset immediately after its acquisition; (c) at the time of the acquisition, it is reasonable to conclude that the acquirer expects to use the CGT asset: (i) for a * taxable purpose; and (ii) within Australia; and (iii) within 12 months; (d) at the time of the acquisition, the CGT asset has not been * installed ready for use, or previously used for a taxable purpose, by any of the following: (i) the acquirer; (ii) an associate disposer of the acquirer; (iii) an * associate pair of the acquirer. Acquisition of certain debt interests (3) For the purposes of paragraph 820 ‑ 423A(2)(f), the acquisition of a * CGT asset is covered by this section if all of the following conditions are satisfied: (a) the CGT asset is a * debt interest; (b) an entity (the acquirer ) holds the debt interest immediately after its acquisition; (c) the debt interest is issued by an * associate pair of the acquirer; (d) the debt interest has not previously been held by any entity.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423B — Amount of debt deduction disallowed

Acquisition of CGT asset, or legal or equitable obligation (1) If the condition in subsection 820 ‑ 423A(2) is met, the amount of the * debt deduction disallowed under subsection 820 ‑ 423A(1) is the amount of the debt deduction, to the extent that the relevant entity mentioned in subsection 820 ‑ 423A(2) incurred it in relation to any of the following: (a) the acquisition mentioned in subparagraph 820 ‑ 423A(2)(d)(i); (b) the holding mentioned in subparagraph 820 ‑ 423A(2)(d)(ii). Financial arrangements involving associate pairs (2) If the conditions in subsection 820 ‑ 423A(5) are met, then under subsection 820 ‑ 423A(1) the * debt deduction is disallowed to the same extent as the extent to which the payer mentioned in paragraph 820 ‑ 423A(5)(a) uses the * financial arrangement in a manner that satisfies paragraph 820 ‑ 423A(5)(b).

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423C — This Subdivision does not limit reduction of debt deductions under other provisions

Nothing in this Subdivision limits other provisions of this Division in their application to reduce, or further reduce, * debt deductions of an entity.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423D — Schemes relating to this Subdivision

(1) Subsection (2) applies if the Commissioner is satisfied that: (a) it is reasonable to conclude that one or more entities (each of which is a participant ) entered into or carried out a * scheme for the principal purpose of, or for more than one principal purpose that included the purpose of, achieving any of the following results: (i) subsection 820 ‑ 423A(2) does not apply in relation to a * debt deduction; (ii) subsection 820 ‑ 423A(5) does not apply in relation to a debt deduction; (whether or not the debt deduction is a debt deduction of any of the participants and whether or not any of them carried out the scheme or any part of the scheme); and (b) the scheme has achieved, or apart from this section would achieve, that purpose. (2) The Commissioner may determine that this Act has, and is taken always to have had, effect as if: (a) subsection 820 ‑ 423A(2) applies in relation to the * debt deduction; or (b) subsection 820 ‑ 423A(5) applies in relation to the debt deduction. (3) A determination under subsection (2) has effect accordingly. (4) This section applies whether or not the scheme has been or is entered into or carried out in Australia or outside Australia, or partly in Australia and partly outside Australia. (5) A determination under subsection (2) is not a legislative instrument. (6) An entity who is dissatisfied with a determination under subsection (2) made in relation to the entity may object against the determination in the manner set out in Part IVC of the Taxation Administration Act 1953 .

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423E — Modified meaning of associate pair

(1) This section applies for the purposes of determining whether, for the purposes of this Subdivision, an entity that is a unit trust is an associate pair of another entity. Treating certain unit trusts as companies (2) Subsection (3) applies if any of the following * CGT events are capable of applying to all of the units and interests in the trust: (a) * CGT event E4; (b) * CGT event E10. (3) For the purposes of determining, under section 318 of the Income Tax Assessment Act 1936 , whether: (a) the trust is an * associate of another entity; or (b) another entity is an associate of the trust; treat the trust as if it were a company. Application of sufficient influence test (4) In determining whether the trust is sufficiently influenced by another entity for the purposes of subsection 318(2) of the Income Tax Assessment Act 1936 , as applied by subsection (3) of this section: (a) treat the trust as sufficiently influenced by another entity or other entities if the trust is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the other entity or other entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); and (b) another entity or other entities are taken to hold a majority voting interest in the trust if either of the following percentages is not less than 50%: (i) the percentage of the income of the trust represented by the share of the income to which the other entity or other entities are entitled, or that the other entity or other entities are entitled to acquire; (ii) the percentage of the corpus of the trust represented by the share of the corpus to which the other entity or other entities are entitled, or that the other entity or other entities are entitled to acquire; and (c) disregard the operation that paragraphs 318(6)(b) and (c) of that Act would otherwise have by reason only of subsection (3) of this section. (5) Subsection (6) applies in determining whether the trust: (a) is sufficiently influenced by another entity for the purposes of section 318 of the Income Tax Assessment Act 1936 ; or (b) sufficiently influences another entity for the purposes of that section. (6) If: (a) there is any breach by any entity of the terms of a * debt interest issued by, or held by, the trust; and (b) there are reasonable grounds to believe that the breach occurred only to protect the interests of secured creditors in relation to the debt interest; sufficient influence is not taken to exist in relation to the trust merely because of the breach.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-423F — Modified meaning of Australian entity

For the purposes of this Subdivision, in determining whether an entity is an * Australian entity (including for the purposes of determining whether another entity is a * foreign entity) at a particular time: (a) for the purposes of paragraph 336(a) of the Income Tax Assessment Act 1936 , treat a partnership as being an Australian entity if, at that time, a * direct participation interest of 50% or more is held in the partnership by one or more of the following: (i) an Australian resident; (ii) an * Australian trust; and (b) disregard section 337 of that Act.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427 — What this Subdivision is about

This Subdivision sets out concepts concerning third party debt. These concepts are relevant to entities that choose to apply the third party debt test, that is: (a) general class investors that make a choice, or that are taken to have made a choice, under subsection 820 ‑ 46(4); and (b) outward investing financial entities (non ‑ ADI) that make a choice under subsection 820 ‑ 85(2C) ; and (c) inward investing financial entities (non ‑ ADI) that make a choice under subsection 820 ‑ 185(2C). Table of sections Operative provisions 820 ‑ 427A Meaning of third party earnings limit and third party debt conditions 820 ‑ 427B Modified third party debt conditions for conduit financing 820 ‑ 427C Conduit financing conditions 820 ‑ 427D Modified meaning of associate entity 820 ‑ 427E Modified meaning of Australian entity

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427A — Meaning of third party earnings limit and third party debt conditions

(1) An entity’s third party earnings limit for an income year is the sum of each * debt deduction of the entity for the income year (disregarding this Division) that is attributable to a * debt interest issued by the entity that satisfies the * third party debt conditions in relation to the income year. (2) For the purposes of subsection (1), treat a * debt deduction of an entity as being attributable to a * debt interest issued by the entity to the extent that: (a) the debt deduction is directly associated with hedging or managing the interest rate risk in respect of the debt interest; and (b) the debt deduction is not referable to an amount paid or payable, directly or indirectly, to an * associate entity (see section 820 ‑ 427D) of the entity. (3) A * debt interest issued by an entity satisfies the third party debt conditions in relation to an income year if the following conditions are satisfied: (a) the entity issued the debt interest to an entity that is not an * associate entity (see section 820 ‑ 427D) of the entity; (b) the debt interest is not held at any time in the income year by an entity that is an associate entity of the entity; (c) disregarding recourse to minor or insignificant assets, the holder of the debt interest has recourse for payment of the debt to which the debt interest relates only to Australian assets that: (i) are covered by subsection (4); and (ii) are not rights covered by subsection (5) (about credit support rights); (d) the entity uses all, or substantially all, of the proceeds of issuing the debt interest to fund its commercial activities in connection with Australia that do not include: (i) any * business carried on by the entity at or through its * overseas permanent establishments; and (ii) the holding by the entity of any * associate entity debt, * controlled foreign entity debt or * controlled foreign entity equity; (e) the entity is an * Australian entity (see section 820 ‑ 427E). (4) This subsection covers Australian assets that: (a) are held by the entity; or (b) are * membership interests in the entity (unless the entity has a legal or equitable interest, whether directly or indirectly, in an asset that is not an Australian asset); or (c) are held by an * Australian entity that is a * member of the * obligor group in relation to the * debt interest. (5) This subsection covers a right under or in relation to a guarantee, security or other form of credit support, other than a right that: (a) is any of the following: (i) a right that provides recourse, directly or indirectly, only to one or more Australian assets covered by subsection (4) that are not rights covered by this subsection; (ii) a right that, assuming that the holder of the right exercised the right, would not reasonably be expected to allow, directly or indirectly, the holder or another entity to have recourse for payment of the debt mentioned in paragraph (3)(c) against an * associate entity (see section 820 ‑ 427D) of the entity that issued that debt interest; (iii) a right that relates wholly to the creation or development of a * CGT asset that is, or is reasonably expected to be, land situated in Australia (including an interest in land, if the land is situated in Australia); (iv) a right that relates wholly to the creation or development of a CGT asset that is, or is reasonably expected to be, moveable property situated, or to be situated, on land of a kind mentioned in subparagraph (iii), where that moveable property is, or is reasonably expected to be, relevant to the income producing use of the land and situated on the land for the majority of its useful life; (v) a right that relates wholly to the creation or development of a CGT asset that is, or is reasonably expected to be, offshore renewable energy infrastructure (within the meaning of the Offshore Electricity Infrastructure Act 2021 ) situated, or to be situated, in a declared area (within the meaning of that Act) for the majority of its useful life; (vi) a right that relates wholly to the creation or development of a CGT asset that is, or is reasonably expected to be, offshore electricity transmission infrastructure (within the meaning of the Offshore Electricity Infrastructure Act 2021 ) that is directly related to offshore renewable energy infrastructure covered by subparagraph (v); and (b) assuming that the holder of the right exercised the right, the right would not reasonably be expected to allow, directly or indirectly, the holder or another entity to have recourse for payment of the debt mentioned in paragraph (3)(c) of this section against a * foreign entity that is an * associate entity of the entity that issued the * debt interest. (6) For the purposes of subparagraphs (5)(a)(iii), (iv), (v) and (vi), in determining whether a right relates wholly to the creation or development of a * CGT asset of a kind mentioned in the relevant subparagraph, disregard the extent (if any) to which the right relates incidentally to another matter.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427B — Modified third party debt conditions for conduit financing

(1) If a * debt interest satisfies the conditions in subsection 820 ‑ 427C(1) in relation to an income year, then this section applies in relation to: (a) that debt interest (the relevant debt interest ); and (b) the debt interest that is the ultimate debt interest mentioned in subsection 820 ‑ 427C(1) in relation to the relevant debt interest. Special rules for third party debt conditions—ultimate debt interest and relevant debt interest (2) In applying section 820 ‑ 427A in relation to the income year, in relation to the relevant debt interest and the ultimate debt interest: (a) treat the reference in subparagraph 820 ‑ 427A(3)(d)(ii) to * associate entity debt as being a reference to associate entity debt other than: (i) a debt interest that satisfies the conditions in subsection 820 ‑ 427C(1) in relation to the ultimate debt interest; or (ii) a debt interest issued by an entity that is an * Australian entity and that has made a choice under subsection 820 ‑ 46(4) to use the third party debt test for the income year; and (b) treat references in paragraphs 820 ‑ 427A(4)(a) and (b) to the entity as including the conduit financer mentioned in paragraph 820 ‑ 427C(1)(a) and each entity that issues a debt interest that satisfies the conditions in subsection 820 ‑ 427C(1) in relation to the ultimate debt interest. Special rules for third party debt conditions—relevant debt interest (3) In applying subsection 820 ‑ 427A(3) in relation to the income year, in relation to the relevant debt interest, in addition to applying subsection (2) of this section: (a) treat the conditions in paragraphs 820 ‑ 427A(3)(a) and (b) as being satisfied; and (b) treat subsection 820 ‑ 427A(3) as also including the condition that the ultimate debt interest satisfies the * third party debt conditions (having regard to subsection (2) of this section) in relation to the income year.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427C — Conduit financing conditions

(1) If, in relation to an income year: (a) an entity (the conduit financer ) issues a * debt interest (the ultimate debt interest ) to an entity (the ultimate lender ) that is not an * associate entity (see section 820 ‑ 427D) of the conduit financer; and (b) an entity (the borrower ) that is an associate entity of the conduit financer issues another debt interest (the relevant debt interest ) to: (i) the conduit financer; or (ii) another entity (the conduit borrower ) that is an associate entity of the conduit financer and the borrower; and (c) the amount loaned under the relevant debt interest: (i) if subparagraph (b)(i) applies—was financed by the conduit financer only with proceeds from the ultimate debt interest; or (ii) if subparagraph (b)(ii) applies—was financed by the conduit borrower only with proceeds from another debt interest that is also a debt interest that satisfies the conditions in this subsection in relation to the ultimate debt interest because of a previous operation of this subsection; and (d) the terms of the relevant debt interest, to the extent that those terms relate to costs incurred by the borrower in relation to the relevant debt interest, are the same as the terms of the ultimate debt interest, to the extent that those terms relate to such costs incurred by the conduit financer in relation to the ultimate debt interest; and (e) the conduit financer, the borrower and each conduit borrower (if any) are * Australian entities (see section 820 ‑ 427E); and (f) it is not the case that subparagraph 820 ‑ 46(1)(b)(i) or (ii) applies (fixed ratio test or group ratio test applies) to the conduit financer, the borrower or any conduit borrowers; then the relevant debt interest satisfies the conditions in this subsection in relation to the income year. (2) For the purposes of paragraph (1)(d): (a) disregard the terms of a * debt interest that is: (i) a relevant debt interest; or (ii) the ultimate debt interest; to the extent that those terms relate to the amount of the debt to which the debt interest relates; and (b) disregard the terms (if any) of the ultimate debt interest that have the effect of allowing (whether directly, or indirectly through one or more interposed borrowers) the recovery of reasonable administrative costs that relate directly to the ultimate debt interest; and (c) disregard the terms (if any) of a relevant debt interest issued to the conduit financer that have the effect of allowing (whether directly, or indirectly through one or more interposed borrowers) the recovery of reasonable administrative costs of the conduit financer that relate directly to the relevant debt interest; and (d) disregard the terms (if any) of a relevant debt interest, to the extent that those terms have the effect of allowing (whether directly, or indirectly through one or more interposed borrowers) the recovery of costs of the conduit financer that: (i) are a * debt deduction for the income year of the conduit financer; and (ii) are a debt deduction that is treated as being attributable to the ultimate debt interest under subsection 820 ‑ 427A(2) because it is directly associated with hedging or managing the interest rate risk in respect of the ultimate debt interest; and (e) disregard the terms (if any) of a relevant debt interest, to the extent that those terms have the effect of allowing (whether directly, or indirectly through one or more interposed borrowers) the recovery of costs of a borrower that: (i) are a debt deduction for the income year of the borrower; and (ii) are a debt deduction that is treated as being attributable to another debt interest under subsection 820 ‑ 427A(2) because it is directly associated with hedging or managing the interest rate risk in respect of that other debt interest.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427D — Modified meaning of associate entity

(1) For the purposes of this Subdivision, in determining whether an entity is an associate entity of another entity: (a) treat the references in paragraphs 820 ‑ 905(1)(a) and 820 ‑ 905(2A)(a) to “an * associate interest of 50% or more” as instead being: (i) for the purposes of paragraph 820 ‑ 427A(5)(b)—a reference to “a * TC control interest of 50% or more”; or (ii) for the purposes of any other provision in this Subdivision—a reference to “a * TC control interest of 20% or more”; and (aa) disregard the requirement in subsections 820 ‑ 905(1) and (2A) that the entity is an * associate of the other entity, unless only paragraph 820 ‑ 905(1)(b) applies; and (b) treat subsection 820 ‑ 860(3) as applying for the purposes of determining whether the entity is an associate entity of the other entity (as a result of paragraph (a) of this subsection); and (c) treat the purposes mentioned in subparagraphs 820 ‑ 870(1)(b)(i) and (ii) as including the purposes of determining whether the entity is an associate entity of the other entity (as a result of paragraph (a) of this subsection). (2) For the purposes of this Subdivision: (a) treat an entity (the first entity ) that has entered into a * cross ‑ staple arrangement with another entity as an associate entity of that other entity; and (b) if that other entity is itself an associate entity of a conduit financer mentioned in section 820 ‑ 427C (whether because of another operation of this subsection or otherwise)—treat the first entity as an associate entity of the conduit financer.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-427E — Modified meaning of Australian entity

For the purposes of this Subdivision, in determining whether an entity is an * Australian entity at a particular time: (a) for the purposes of paragraph 336(a) of the Income Tax Assessment Act 1936 , treat a partnership as being an Australian entity if, at that time, a * direct participation interest of 50% or more is held in the partnership by one or more of the following: (i) an Australian resident; (ii) an * Australian trust; and (b) disregard section 337 of that Act.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-430 — When choice can be made, and what effect it has

(1) An entity may choose to be treated, for the purposes of this Division (except this Subdivision), as set out in the table. However, the entity can make the choice only if subsection (5) is satisfied. Choice by financial entity to be treated as an ADI Column 1 Column 2 Item For a period that the choice covers, and for which the entity would, apart from this Subdivision, have been: The entity is treated as if it had instead been: 1 an * outward investing financial entity (non ‑ ADI) an * outward investing entity (ADI) 2 an * inward investor (financial) an * inward investing entity (ADI) 3 an * inward investment vehicle (financial) an * outward investing entity (ADI) (2) The choice: (a) has effect accordingly, except as provided in subsection (4); and (b) ceases to have effect only as provided in this Subdivision; and (c) covers each period: (i) that started on or after a day specified in the choice (or on the day the choice is made if no day is specified); and (ii) that is all or part of an income year. (3) Subdivision 820 ‑ E applies to the entity, in relation to a period for which this section treats it as an * inward investing entity (ADI), as if all the entity’s * business were banking business of the entity. (4) The choice does not have effect for the purposes of determining whether the entity is covered by paragraph 820 ‑ 910(2)(a) (about working out the associate entity debt of another entity). Conditions for making the choice (5) For the income year that is or includes the first period for which the entity would be treated in accordance with the choice, the entity must satisfy: (a) subsection 820 ‑ 435(1); or (b) subsections 820 ‑ 435(2) and (3). Also, the entity must not have made a previous choice under this section that has ceased to have effect. Conditions are retested every 3 years (6) The choice ceases to have effect, or is taken to have ceased to have effect, as appropriate, at the end of an income year covered by subsection (7) of this section, unless the entity: (a) satisfies subsection 820 ‑ 435(1) for that income year; or (b) satisfies subsections 820 ‑ 435(2) and (3) for that income year. (7) This subsection covers every third income year after the one referred to in subsection (5).

Amendment history: Inserted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 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: 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.

Amendment history: Inserted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 76 of 2023, effective sch 2 (items 649-659), sch 3 (item 41): 20 Oct 2023 (s 2(1) items 2, 14) sch 6 (item 32): 21 Sept 2023 (s 2(1) item 22)

s 820-440 — Revocation of choice

(1) A choice under section 820 ‑ 430 can be revoked only with the written approval of the Commissioner. The Commissioner may approve a revocation only if satisfied that the entity’s circumstances have changed significantly since the choice was made. (2) If revoked, the choice does not have effect for a period that starts on or after the day on which the Commissioner’s approval is given, unless the revocation is expressed to take effect on an earlier day. In that case, it does not have effect for a period that starts on or after the earlier day.

Amendment history: Inserted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-445 — How this Subdivision interacts with Subdivision 820 ‑ FA

A choice under section 820 ‑ 430 does not have effect for so much of a period as happens while the entity is a * subsidiary member of a * consolidated group or * MEC group. Note: If the head company of the group makes a choice under that section, that choice will have effect instead.

Amendment history: Inserted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 820-579 — What this Subdivision is about

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). Table of sections Operative provisions 820 ‑ 581 How this Division applies to head company for income year in which group comes into existence or ceases to exist 820 ‑ 583 Classification of head company 820 ‑ 584 Exempt special purpose entities treated as not being member of group 820 ‑ 585 Exemption for consolidated group headed by foreign ‑ controlled Australian ADI or its holding company 820 ‑ 587 Additional application of Subdivision 820 ‑ D to MEC group that includes foreign ‑ controlled Australian ADI 820 ‑ 588 Choice to treat specialist credit card institutions as being financial entities and not ADIs 820 ‑ 589 How Subdivision 820 ‑ D applies to a MEC group 820 ‑ 590 Treatment of FRT disallowed amounts—joining case 820 ‑ 591 Effect of transfer of FRT disallowed amount 820 ‑ 592 Cancelling the transfer of FRT disallowed amount 820 ‑ 593 FRT disallowed amount cannot be applied for income year ending after the joining time 820 ‑ 594 Treatment of FRT disallowed amounts—leaving case

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 820-581 — How this Division applies to head company for income year in which group comes into existence or ceases to exist

If a * consolidated group or * MEC group: (a) comes into existence at a time during an income year that is not the start of the income year; or (b) ceases to exist at a time during an income year that is not the end of the income year; then, for each of the following periods during that income year: (c) a period throughout which a company is the * head company of that group; or (d) a period throughout which that company is the head company of a different consolidated group or MEC group; or (e) a period throughout which that company is a * member of no consolidated group or MEC group; this Division (except this section) is to have either: (f) a single application in relation to the whole of the period; or (g) 2 or more applications, each in relation to a part of that period.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-583 — Classification of head company

General class investor (1) The * head company of a * consolidated group or of a * MEC group is a general class investor for a period that is all or part of an income year if: (a) for that period, the head company satisfies the requirement in subsection 820 ‑ 46(2); and (b) no * member of the group is a * financial entity or * ADI at any time during that period. Outward investing financial entity (non ‑ ADI) (3) The * head company of a * consolidated group or of a * MEC group is an outward investing financial entity (non ‑ ADI) for a period that is all or part of an income year if: (a) for that period, the head company satisfies the condition in the second column of item 1 or 2 of the table in subsection 820 ‑ 85(2); and (b) throughout that period, there is at least one * member of the group that is a * financial entity; and (c) no * member of the group is an * ADI at any time during that period. Inward investing financial entity (non ‑ ADI) (4) The * head company of a * consolidated group or of a * MEC group is an inward investing financial entity (non ‑ ADI) for a period that is all or part of an income year if, and only if, it is an * inward investment vehicle (financial) for that period (because of subsection (6)). Inward investment vehicle (financial) (6) The * head company of a * consolidated group or of a * MEC group is an inward investment vehicle (financial) for a period that is all or part of an income year if: (a) throughout that period, the head company is a * foreign controlled Australian entity; and (b) throughout that period, there is at least one * member of the group that is a * financial entity; and (c) no member of the group is an * ADI at any time during that period. Outward investing entity (ADI) (7) The * head company of a * consolidated group or of a * MEC group is an outward investing entity (ADI) for a period that is all or part of an income year if, and only if: (a) apart from Part 3 ‑ 90 (about consolidation of groups) and this Subdivision, at least one * member of the group would be an * outward investing entity (ADI) for that period; or (b) these conditions are met: (i) at least one member of the group would, apart from that Part and this Subdivision, be an * outward investing financial entity (non ‑ ADI) for that period; and (ii) at least one member of the group is an * ADI throughout that period.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 65 of 2019, effective Sch 1 (items 4–18): 1 Oct 2019 (s 2(1) item 2) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-584 — Exempt special purpose entities treated as not being member of group

While an entity meets the conditions in subsection 820 ‑ 39(3) (about insolvency ‑ remote special purpose entities established to manage economic risk), the entity is treated for the purposes of this Division (except this section) as not being a * member of a * consolidated group or * MEC group of which it is a member. Note: This section has the effect that the circumstances of the entity are not taken into account in applying this Division to the head company of the group. The entity itself is exempt from this Division because of section 820 ‑ 39.

Amendment history: Inserted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-585 — Exemption for consolidated group headed by foreign ‑ controlled Australian ADI or its holding company

(1) This Division does not disallow any of a * debt deduction for an income year if: (a) the debt deduction is of the * head company of a * consolidated group and the head company satisfies subsection (2) for that income year; or (b) the debt deduction is an amount incurred by the head company of a consolidated group during a period that is part of that income year, and the head company satisfies subsection (2) for that period. (2) The * head company satisfies this subsection for a period that is all or part of an income year if, throughout that period: (a) the head company is both a * foreign controlled Australian company and an * ADI (and would also be an ADI apart from Part 3 ‑ 90 (about consolidation of groups)); or (b) the head company: (i) is a * foreign controlled Australian company; and (ii) beneficially owns all the * membership interests in a * member of the group that is both a * foreign controlled Australian entity and an * ADI throughout that period; and (iii) would, apart from Part 3 ‑ 90 (about consolidation of groups), have no other assets and no * debt capital; unless at least one member of the group would, apart from that Part and this Subdivision, be an * outward investing financial entity (non ‑ ADI) or * outward investing entity (ADI) for all or part of that period. (3) Subsection (1) does not apply if, at each time in the period mentioned in subsection (2), all the * ADIs that are * members of the group then are * specialist credit card institutions.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-587 — Additional application of Subdivision 820 ‑ D to MEC group that includes foreign ‑ controlled Australian ADI

Subdivision 820 ‑ D applies to the * head company of a * MEC group as if it were an * outward investing entity (ADI) for a period that is all or part of an income year if: (a) the head company is not an outward investing entity (ADI) for that period; and (b) throughout that period, at least one * member of the group is both a * foreign controlled Australian entity and an * ADI; and (c) throughout that period, there is at least one * eligible tier ‑ 1 company of the * top company for the group that: (i) is a member of the group; and (ii) is not an ADI; and (iii) has no * wholly ‑ owned subsidiary that is an ADI.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 820-588 — Choice to treat specialist credit card institutions as being financial entities and not ADIs

(1) If the conditions in subsection (2) are met in relation to a * consolidated group or * MEC group and a period that is all or part of an income year, this Division (except this section) has effect as if: (a) none of the * members of the group were an * ADI at any time in the period; and (b) each member of the group that is an ADI (ignoring paragraph (a)) at any time in the period were a financial entity at that time. Note 1: One result of this Division having effect in that way is that Subdivision 820 ‑ D (and related provisions, such as section 820 ‑ 589) will not apply in relation to the head company, because: (a) the head company of the group will not be classified under section 820 ‑ 583 as an outward investing entity (ADI); and (b) section 820 ‑ 587 will not apply that Subdivision. Note 2: Another result of this Division having effect in that way is that Subdivision 820 ‑ B or 820 ‑ C may apply in relation to the head company, because it may be classified under section 820 ‑ 583 as either: (a) an outward investing financial entity (non ‑ ADI); or (b) an inward investing financial entity (non ‑ ADI) and an inward investment vehicle (financial). (2) The conditions are that: (a) at all times in the period at least one * member of the * consolidated group or * MEC group is an * ADI; and (b) each ADI that is a member of the group at any time in the period is a * specialist credit card institution at that time; and (c) the * head company of the group for the period chooses, before lodging its * income tax return for the income year, that this Division should have effect in that way in relation to the group and every period for which the conditions in paragraphs (a) and (b) are met in the income year. (3) An * ADI is a specialist credit card institution at a time if, at that time, the ADI’s authority under section 9 of the Banking Act 1959 to carry on banking business (as defined in that Act) authorises the ADI to carry on only banking business that: (a) is participation in a payment system (as defined in the Payment Systems (Regulation) Act 1998 ) that is a credit card scheme and is designated under section 11 or 11B of that Act; and (b) is either or both of the following: (i) credit card acquiring (as defined in regulations made for the purposes of the Banking Act 1959 ); (ii) credit card issuing (as defined in those regulations). (4) To avoid doubt, a choice for the purposes of paragraph (2)(c) cannot be revoked.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3) | Amended by No 46 of 2025, effective sch 1 (items 128, 129): 19 Dec 2025 (s 2(1) item 1)

s 820-589 — How Subdivision 820 ‑ D applies to a MEC group

(1) This section has effect for the purposes of working out the * adjusted average equity capital of the * head company of a * MEC group for a period (the test period ) that is all or part of an income year if Subdivision 820 ‑ D applies to the head company in relation to that period. Note: Section 820 ‑ 587 extends the application of Subdivision 820 ‑ D. (2) The * head company’s * ADI equity capital at a particular time during the test period is to be worked out: (a) taking into account an * equity interest or * debt interest in the head company only if it is held at that time by an entity that is not a member of the group; and (b) on the basis that an equity interest or debt interest in an * eligible tier ‑ 1 company (other than the head company) that is a member of the group at that time is treated as an equity interest or debt interest (as appropriate) in the head company, but only if it is held at that time by an entity that is not a member of the group; and (c) on the basis of the information that would be contained in a set of consolidated accounts: (i) prepared, in accordance with the * accounting standard on consolidated accounts, as at that time; and (ii) covering the members of the group as at that time.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Repealed and substituted by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-590 — Treatment of FRT disallowed amounts—joining case

(1) This section applies if: (a) an entity (the joining entity ) becomes a * member of a * consolidated group (the joined group ) at a time (the joining time ) in an income year (the joining year ); and (b) the joining entity had a * FRT disallowed amount for an income year ending before the joining time. (2) Subject to subsection (4), the * FRT disallowed amount is transferred at the joining time from the joining entity to the * head company of the joined group (even if they are the same entity). (3) To avoid doubt, the result of the transfer under subsection (2) is that the * head company of the joined group has the * FRT disallowed amount for the income year mentioned in paragraph (1)(b). (4) The * FRT disallowed amount is transferred under subsection (2) only to the extent (if any) that the FRT disallowed amount could have been applied by the joining entity under paragraph 820 ‑ 56(2)(b) in respect of an income year (the trial year ) consisting of the period described in subsection (5) if: (a) at the joining time, the joining entity had not become a * member of the joined group (but had been a * wholly ‑ owned subsidiary of the * head company if the joining entity is not the head company); and (b) the amount applied by the joining entity under paragraph 820 ‑ 56(2)(b) in respect of the trial year were not limited by the joining entity’s excess mentioned in that paragraph in respect of the trial year. (5) For the purposes of subsection (4), the period is the period: (a) starting at the latest of the following times: (i) the time 12 months before the joining time; (ii) the time the joining entity came into existence; (iii) the time the joining entity last ceased to be a * subsidiary member of a * consolidated group, if the joining entity had been a member of a consolidated group before the joining time but was not a * member of a consolidated group just before the joining time; and (b) ending just after the joining time. (6) When working out, for the purposes of subsection (4), whether the joining entity carried on, throughout the * trial year (or a period including the trial year): (a) the same business as the business it carried on at a particular time; or (b) a similar business to the business it carried on at that time; assume that the entity carried on at and just after the joining time the same business that it carried on just before the joining time. (7) If the * FRT disallowed amount was for an income year all or part of which occurs in the trial year, the transfer of the FRT disallowed amount under subsection (2) is not prevented by the fact that the FRT disallowed amount was for that income year. (8) If, apart from this subsection, the * head company of the joined group would have 2 or more * FRT disallowed amounts (the transferred FRT disallowed amounts ) for a particular income year as a result of the operation of subsection (2): (a) treat it as having only one FRT disallowed amount for the income year; and (b) treat that one FRT disallowed amount as being equal to the sum of the transferred FRT disallowed amounts.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-591 — Effect of transfer of FRT disallowed amount

(1) This section applies if an * FRT disallowed amount is transferred under section 820 ‑ 590 from the joining entity to the * head company of the joined group. (2) For the purposes of subsection 820 ‑ 59(4), this Act operates (except so far as the contrary intention appears) for the purposes of income years ending after the joining time as if the head company had the * FRT disallowed amount for the income year in which the joining time occurs. (3) For the purposes of applying subsection 820 ‑ 59(4) in relation to the * FRT disallowed amount, treat the disallowance year mentioned in paragraph 820 ‑ 59(4)(b) as starting at the time of the transfer.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 21 of 2005, effective 21 Mar 2005 | Repealed by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent | Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-592 — Cancelling the transfer of FRT disallowed amount

(1) The * head company of the joined group may choose to cancel the transfer of the FRT disallowed amount under section 820 ‑ 590. (2) If the * head company of the joined group does so, this Act (except this section) operates for all income years ending after the transfer as if it had not occurred under section 820 ‑ 590. (3) The choice cannot be revoked.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-593 — FRT disallowed amount cannot be applied for income year ending after the joining time

To the extent that the * FRT disallowed amount is not transferred under section 820 ‑ 590 from the joining entity to the * head company of the joined group, the FRT disallowed amount cannot be applied under paragraph 820 ‑ 56(2)(b) by any entity in respect of an income year ending after the joining time.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-594 — Treatment of FRT disallowed amounts—leaving case

To avoid doubt, if the * head company of a * consolidated group has a * FRT disallowed amount and an entity ceases to be a * subsidiary member of the group, the entity is not taken because of section 701 ‑ 40 (the exit history rule) to have the FRT disallowed amount.

Amendment history: Inserted by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-595 — What this Subdivision is about

If: (a) the head company of a consolidated group or MEC group; or (b) an Australian company that cannot consolidate; is a member of the same wholly ‑ owned group as a foreign bank or foreign financial entity, the company can choose to treat as part of itself the Australian branches of the foreign bank or foreign financial entity, affecting how the rest of this Division applies. Table of sections Choice to group with branches of foreign banks and foreign financial entities 820 ‑ 597 Choice by head company of consolidated group or MEC group 820 ‑ 599 Choice by Australian resident company outside consolidatable group and MEC group Effect of choice 820 ‑ 601 Application 820 ‑ 603 General 820 ‑ 605 Effect on establishment entity if certain debt deductions disallowed 820 ‑ 607 Effect on test periods under this Division 820 ‑ 609 Effect on classification of head company or single company 820 ‑ 610 Choice not to be outward investing entity (ADI) or inward investing entity (ADI) 820 ‑ 611 Values to be based on what would be in consolidated accounts for group 820 ‑ 613 How Subdivision 820 ‑ D applies 820 ‑ 615 How Subdivision 820 ‑ E applies

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 21 of 2005, effective 21 Mar 2005 | Repealed and substituted by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-597 — Choice by head company of consolidated group or MEC group

(1) This section applies if there is a period (the grouping period ) for which all these conditions are met: (a) the period was all or part of an income year of the * head company of a * consolidated group or * MEC group; (b) the consolidated group or MEC group existed throughout the period; (c) the head company and an entity (the establishment entity ) covered by one of the following subparagraphs are both members of the same * wholly ‑ owned group throughout the period: (i) a * foreign bank that carried on its banking * business in Australia through at least one * Australian permanent establishment at each time in the period; (ii) a * foreign entity that was a * financial entity and had at least one Australian permanent establishment at each time in the period; (d) there is not a longer period in the income year for which the conditions in paragraphs (a), (b) and (c) are met in relation to the head company and the establishment entity. Note: It does not matter whether the income year ended on the same day for the head company and the establishment entity. (2) The * head company may choose to have all of the * Australian permanent establishments of the establishment entity treated as part of the head company for the grouping period for the purposes of this Division. (3) If the conditions in subsection (1) are met in relation to the * head company and more than one other establishment entity, the head company may make a different choice in relation to each of the other establishment entities.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Repealed and substituted by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-599 — Choice by Australian resident company outside consolidatable group and MEC group

(1) This section applies if there is a period (also the grouping period ) for which all these conditions are met: (a) the period was all or part of an income year of a company (the single company ); (b) throughout the period the single company: (i) was an * Australian entity; and (ii) was not a * prescribed dual resident; and (iii) was not a * member of a * consolidatable group; and (iv) was not a member of a * consolidated group; and (v) was not a member of a * MEC group; (c) the single company and an entity (the establishment entity ) covered by one of the following subparagraphs are both members of the same * wholly ‑ owned group throughout the period: (i) a * foreign bank that carried on its banking * business in Australia through at least one * Australian permanent establishment at each time in the period; (ii) a * foreign entity that was a * financial entity and had at least one Australian permanent establishment at each time in the period; (d) there is not a longer period in the income year for which the conditions in paragraphs (a), (b) and (c) are met in relation to the single company and the establishment entity. Note: It does not matter whether the income year ended on the same day for the single company and the establishment entity. (2) The single company may choose to have all of the * Australian permanent establishments of the establishment entity treated as part of the single company for the grouping period for the purposes of this Division. (3) If the conditions in subsection (1) are met in relation to the single company and more than one other establishment entity, the single company may make a different choice in relation to each of the other establishment entities.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Repealed and substituted by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-601 — Application

Sections 820 ‑ 603 to 820 ‑ 615 apply if a choice is made under section 820 ‑ 597 or 820 ‑ 599.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 820-603 — General

(1) The choice cannot be revoked in relation to the grouping period. It binds the * head company or the single company, as appropriate, and the establishment entity. (2) The rest of this section applies: (a) to each * Australian permanent establishment that: (i) was an Australian permanent establishment of the establishment entity; and (ii) if the establishment entity was a * foreign bank—was an Australian permanent establishment through which the entity carried on banking * business in Australia at any time in the grouping period; and (b) in relation to each time (the test time ) that was in the grouping period and was when the Australian permanent establishment: (i) was an Australian permanent establishment of the establishment entity; and (ii) if the establishment entity was a foreign bank—was an Australian permanent establishment through which the entity carried on banking business in Australia. (3) In the case of a choice under section 820 ‑ 597, this Division (except Subdivision 820 ‑ FA, this Subdivision and Subdivision 820 ‑ L) applies as if, at the test time, the * Australian permanent establishment: (a) had been part of the * head company; and (b) had not been part of the establishment entity; and (c) were a * subsidiary member of the * consolidated group or * MEC group. (4) In the case of a choice under section 820 ‑ 599, this Division (except Subdivision 820 ‑ FA, this Subdivision and Subdivision 820 ‑ L) applies as if, at the test time: (a) the * Australian permanent establishment had been part of the single company and had not been part of the establishment entity; and (b) the single company were a * consolidated group of which the single company was the * head company and the Australian permanent establishment was a * subsidiary member. (5) In either case, without limiting subsection (3) or (4), this Division (except Subdivision 820 ‑ FA, this Subdivision and Subdivision 820 ‑ L) applies as if: (a) the * Australian permanent establishment were an entity at that time; and (b) each asset and liability of the establishment entity at the test time that is attributable to the Australian permanent establishment were an asset or liability of the Australian permanent establishment at that time; and (c) without limiting paragraph (b) of this subsection, each cost that: (i) is a * debt deduction of the establishment entity incurred at the test time; and (ii) is attributable to the Australian permanent establishment; were a cost incurred by the Australian permanent establishment at that time; For the effects of disallowing debt deductions, see section 820 ‑ 605. (6) However, the application of this Division because of this section is subject to the modifications set out in sections 820 ‑ 607 to 820 ‑ 615. (7) For the purposes of this Division (as applying because of this Subdivision), this Act (except this Division) applies as if the matters referred to in subsections (3), (4) and (5) of this section were the case. Note: For example, this means that a head company is treated for the purposes of this Division as if it had debt deductions based on the actual costs incurred by an Australian permanent establishment while it is treated as part of the head company because of this section.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 820-605 — Effect on establishment entity if certain debt deductions disallowed

If: (a) apart from this Division, a * debt deduction would be a deduction of the establishment entity for an income year; and (b) this Division (as applying because of this Subdivision) disallows all or part of the deduction (treated as a deduction of the * head company or single company); this section disallows the deduction of the establishment entity, or that part of it, as appropriate. Note 1A: The disallowed amount also does not form part of the cost base of a CGT asset. See section 110 ‑ 54. Note 1: This Division does not disallow a debt deduction that the establishment entity incurs during the grouping period and that consists of a cost that is: • attributable to an Australian permanent establishment covered by the choice under section 820 ‑ 597 or 820 ‑ 599; and • paid or owed to the head company or single company. The cost is not a debt deduction of the head company or single company for the purposes of this Division as applying because of this Subdivision. This is because subsection 820 ‑ 603(3) or (4) treats the Australian permanent establishment as being part of the head company or single company, so the cost is treated as being paid or owed by the head company or single company to itself. Because subsection 820 ‑ 603(3) or (4) also treats the Australian permanent establishment as not being part of the establishment entity, the cost is not a debt deduction of the establishment entity, so it is not disallowed by this Division as applying to the establishment entity. Note 2: This Division also does not disallow a debt deduction that the head company or single company incurs during the grouping period and that consists of a cost that is: • paid or owed to the establishment entity; and • is attributable to an Australian permanent establishment covered by the choice under section 820 ‑ 597 or 820 ‑ 599. The cost is not a debt deduction of the head company or single company for the purposes of this Division as applying because of this Subdivision. This is because subsection 820 ‑ 603(3) or (4) treats the Australian permanent establishment as being part of the head company or single company, so the cost is treated as being paid or owed by the head company or single company to itself.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-607 — Effect on test periods under this Division

If, apart from this section, this Division (except this Subdivision) would have a single application to the * head company or single company, or to the establishment entity, in relation to a period (the test period ) that: (a) is all or part of an income year of that entity; and (b) overlaps the grouping period; this Division (except this section) is to have separate applications to that entity as follows: (c) a single application in relation to the period of overlap; and (d) a single application in relation to the part (if any) of the test period that is before the period of overlap; and (e) a single application in relation to the part (if any) of the test period that is after the period of overlap.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-609 — Effect on classification of head company or single company

(1) The * head company or single company is an outward investing entity (ADI) for a period (the trial period ) that is all or part of the grouping period if: (a) apart from this Subdivision, the head company or single company would be an * outward investing entity (ADI) for the trial period; or (b) apart from this Subdivision, the head company or single company: (i) would be an * outward investing financial entity (non ‑ ADI) for the trial period; and (ii) at least one of the * Australian permanent establishments is a * permanent establishment through which a * foreign bank carries on banking * business in Australia. (2) The * head company is also an outward investing entity (ADI) for the trial period if, apart from this Subdivision: (a) section 820 ‑ 585 would prevent the disallowance of a * debt deduction for the income year including the trial period; or (b) section 820 ‑ 587 would apply Subdivision 820 ‑ D to the head company as if it were an * outward investing entity (ADI) for the trial period. (3) The single company is also an outward investing entity (ADI) for the trial period if it is both a * foreign controlled Australian company and an * ADI for that period. (4) The * head company or single company is an inward investing entity (ADI) for the trial period if: (a) apart from this Subdivision, it would be an * inward investment vehicle (financial), and not an * outward investing financial entity (non ‑ ADI), for the trial period; and (b) at least one of the * Australian permanent establishments is a * permanent establishment through which a * foreign bank carries on banking * business in Australia. (5) The * head company or single company is an outward investing financial entity (non ‑ ADI) for the trial period if, apart from this Subdivision: (a) it would be an * outward investing financial entity (non ‑ ADI) for that period; and (b) at least one of the * Australian permanent establishments is a * permanent establishment of a * foreign entity that is a * financial entity; and (c) none of the Australian permanent establishments is a permanent establishment through which a * foreign bank carries on banking * business in Australia. (6) The * head company or single company is an inward investing financial entity (non ‑ ADI) and an inward investment vehicle (financial) for the trial period if, apart from this Subdivision: (a) it would be an * inward investing financial entity (non ‑ ADI) and an * inward investment vehicle (financial) for that period; and (b) it would not be an * outward investing financial entity (non ‑ ADI) for that period; and (c) at least one of the * Australian permanent establishments is a * permanent establishment of a * foreign entity that is a * financial entity; and (d) none of the Australian permanent establishments is a permanent establishment through which a * foreign bank carries on banking * business in Australia. (7) This section has effect despite any other provision of this Division, except Subdivision 820 ‑ EA and section 820 ‑ 610. Note: If the head company or single company is an outward investing financial entity (non ‑ ADI) or inward investment vehicle (financial) under this section and satisfies subsection 820 ‑ 430(5), it may choose under Subdivision 820 ‑ EA to be treated as an outward investing entity (ADI). Section 820 ‑ 603 affects whether the company satisfies that subsection, by treating as part of the company each relevant foreign financial entity’s Australian permanent establishment.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Repealed and substituted by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-610 — Choice not to be outward investing entity (ADI) or inward investing entity (ADI)

(1) This section applies if: (a) apart from this section, the * head company or single company would, under section 820 ‑ 609, be an * outward investing entity (ADI) or an * inward investing entity (ADI) for the trial period; and (b) at all times in the trial period, each of the following entities that is an * ADI is a * specialist credit card institution: (i) the head company or single company; (ii) an establishment entity whose * Australian permanent establishments the head company or single company has chosen under section 820 ‑ 597 or 820 ‑ 599 to have treated as part of the company for the period. (2) The * head company or single company is an outward investing financial entity (non ‑ ADI) for the trial period if: (a) apart from this section, the company would, under section 820 ‑ 609, be an * outward investing entity (ADI) for the trial period; and (b) the company chooses, before lodging its * income tax return for the income year including the trial period, to be an outward investing financial entity (non ‑ ADI) for that period. (3) The * head company or single company is an inward investing financial entity (non ‑ ADI) and an inward investment vehicle (financial) for the trial period if: (a) apart from this section, the company would, under section 820 ‑ 609, be an * inward investing entity (ADI) for the trial period; and (b) the company chooses, before lodging its * income tax return for the income year including the trial period, to be an inward investing financial entity (non ‑ ADI) and an inward investment vehicle (financial) for that period. (4) This section has effect despite sections 820 ‑ 85, 820 ‑ 185 and 820 ‑ 609.

Amendment history: Inserted by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-611 — Values to be based on what would be in consolidated accounts for group

(1) For the purposes of this Division as applying because of this Subdivision, the value or amount of a particular matter as at a particular time during the grouping period is to be worked out, so far as practicable, on the basis of the information that would be contained in a set of consolidated accounts: (a) prepared, in accordance with the * accounting standard on consolidated accounts, as at that time; and (b) covering the * consolidated group, * MEC group or single company, as appropriate, and each * Australian permanent establishment that section 820 ‑ 603 treats as part of the * head company or single company at that time. Note: This subsection does not depend on whether such a set of consolidated accounts was prepared, or had to be prepared, for other purposes. (2) To avoid doubt, subsection (1) also applies to working out the value or amount, as at a particular time, of a matter mentioned in any of sections 820 ‑ 613 to 820 ‑ 615.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 820-613 — How Subdivision 820 ‑ D applies

(1) This section has effect for the purposes of applying Subdivision 820 ‑ D to the * head company or single company in relation to a period (the test period ) that is all or part of the grouping period. Note: Subdivision 820 ‑ D applies to the head company or single company if it is classified as an outward investing entity (ADI) because of section 820 ‑ 609, either alone or in conjunction with a choice made by the company under section 820 ‑ 430. Adjusted average equity capital (2) The * adjusted average equity capital of the * head company or single company for the test period is increased by the average value, for the period, of the amount worked out under subsection (3). Note 1: In the case of a choice under section 820 ‑ 599, paragraph 820 ‑ 603(4)(b) treats the single company and the relevant Australian permanent establishments as a consolidated group. Note 2: To calculate an average value for the purposes of this Division, see Subdivision 820 ‑ G. (3) The amount worked out under this subsection as at a particular day is the total of the amounts worked out under the following paragraphs for each of the establishment entity’s * Australian permanent establishments that section 820 ‑ 603 treats as part of the * head company or single company on that day: (a) so much of the establishment entity’s * ADI equity capital, at the end of the day, as: (i) is attributable to that Australian permanent establishment; and (ii) has not been allocated to the * OB activities of the entity; (b) the amounts that, as at the end of that day: (i) are made available by the establishment entity to the Australian permanent establishment as loans to it; and (ii) do not give rise to any * debt deductions of the entity for the income year or any other income year. Note: The amounts are to be worked out, so far as practicable, on the basis of the information that would be contained in a set of consolidated accounts. See section 820 ‑ 611. Risk ‑ weighted assets (4) For each of the establishment entity’s * Australian permanent establishments that is covered by the choice, the * risk ‑ weighted assets of the * head company or single company include that part of the entity’s risk ‑ weighted assets that: (a) is attributable to that Australian permanent establishment; and (b) is not attributable to the entity’s * OB activities.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent

s 820-615 — How Subdivision 820 ‑ E applies

(1) This section has effect for the purposes of applying Subdivision 820 ‑ E to the * head company or single company in relation to a period (the test period ) that is all or part of the grouping period. Note: Subdivision 820 ‑ E applies to the head company or single company if it is classified as an inward investing entity (ADI) because of section 820 ‑ 609. Average equity capital (2) The average equity capital of the * head company or single company for the test period is: (a) the average value, for that period, of all the * ADI equity capital of the company; plus (b) the average value, for that period, of the amount worked out under subsection 820 ‑ 613(3). Note 1: In the case of a choice under section 820 ‑ 599, paragraph 820 ‑ 603(4)(b) treats the single company and the relevant Australian permanent establishments as a consolidated group. Note 2: To calculate an average value for the purposes of this Division, see Subdivision 820 ‑ G. Safe harbour capital amount (3) The safe harbour capital amount of the * head company or single company for the test period is worked out using the following method statement. 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 . Risk ‑ weighted assets (4) For each of the establishment entity’s * Australian permanent establishments covered by the choice, the * risk ‑ weighted assets of the * head company or single company include that part of the entity’s risk ‑ weighted assets that: (a) is attributable to that Australian permanent establishment; and (b) is not attributable to the entity’s * OB activities.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 64 of 2005, effective Schedule 2: 27 June 2005 Schedule 5: 29 June 2004 Remainder: Royal Assent | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7)

s 820-625 — What this Subdivision is about

This Subdivision sets out the methods of calculating the average values for the purposes of this Division. It also includes special rules about values and valuation that are relevant to that calculation. Note: Section 820 ‑ 25 of the Income Tax (Transitional Provisions) Act 1997 provides for a transitional rule that affects the operation of this Subdivision in relation to an income year that begins before 1 July 2002 and ends before 30 June 2003. Table of sections How to calculate the average values 820 ‑ 630 Methods of calculating average values 820 ‑ 635 The opening and closing balances method 820 ‑ 640 The 3 measurement days method 820 ‑ 645 The frequent measurement method Special rules about values and valuation 820 ‑ 675 Amount to be expressed in Australian currency 820 ‑ 680 Valuation of assets, liabilities and equity capital 820 ‑ 682 Recognition of assets and liabilities—modifying application of accounting standards 820 ‑ 685 Valuation of debt capital 820 ‑ 690 Commissioner’s power

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-630 — Methods of calculating average values

Methods of calculation for entities that are not ADIs (1) An entity to which Subdivision 820 ‑ B or 820 ‑ C applies for a period that is all or a part of an income year must use one of the following methods to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application: (a) the method set out in section 820 ‑ 635 (the opening and closing balances method ); (b) the method set out in section 820 ‑ 640 (the 3 measurement days method ); (c) the method set out in section 820 ‑ 645 (the frequent measurement method ). Note 1: This subsection therefore applies only to an outward investing financial entity (non ‑ ADI) or an inward investing financial entity (non ‑ ADI). Note 2: An entity cannot apply the 3 measurement days method if it is unable to meet the requirements in subsection 820 ‑ 640(1). An entity’s ability to apply that method may therefore be limited. (2) The entity must use the same method to calculate all such average values for that period for the purposes of that application. Commissioner’s power (3) If the entity fails to comply with subsection (2), the Commissioner may, irrespective of the methods used by the entity, recalculate all the average values for the entity and that period by using the opening and closing balances method. Method of calculation for ADIs (4) An entity to which Subdivision 820 ‑ D or 820 ‑ E applies for a period that is all or a part of an income year must use the frequent measurement method to calculate the average value of a matter mentioned in that Subdivision for the purposes of that application. Note: This subsection therefore applies only to an outward investing entity (ADI) or an inward investing entity (ADI).

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-635 — The opening and closing balances method

An entity that uses the opening and closing balances method for a period must apply the following method statement to calculate the average value of a matter for that period. 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. Example: ALWZ Corporation, a company that is an Australian entity, held assets valued at $95 million on the first day of an income year. It held assets valued at $105 million at the end of that year. Adding those amounts and dividing the result by 2 gives the average value of its assets for that year, which is $100 million.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-640 — The 3 measurement days method

Application (1) An entity must not use the 3 measurement days method for a period that is a part of an income year unless the following days occur during that period: (a) the last day of the first half of the income year; (b) one or both of the following days: (i) the first day of that year; (ii) the last day of that year. Method statement (2) An entity that uses the 3 measurement days method for a period must apply the following method statement to calculate the average value of a matter for that period. 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. Example: RJ Corporation held assets valued at $115 million on the first day of an income year. It held assets valued at $105 million on the last day of the first half of that year, and $80 million on the last day of that year. Adding these amounts and dividing the result by 3 gives the average value of its assets for that year, which is $100 million. Measurement days (3) The following are the first , second and third measurement days : (a) the first measurement day is the first day of the income year if it occurs during that period, otherwise it is the first day of that period; (b) the second measurement day is the last day of the first half of that year; (c) the third measurement day is the last day of that year if it occurs during that period, otherwise it is the last day of that period.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-645 — The frequent measurement method

(1) An entity that uses the frequent measurement method for a period (the measurement period ) must calculate the average value of a matter for that period by applying: (a) the method statement in subsection (2) (generally based on quarterly periods); or (b) the method statement in subsection (4) (generally based on regular intervals). This section does not prevent the entity from applying the method statement in subsection (2) for one matter and the method statement in subsection (4) for another matter in relation to that period. (2) This is the method statement for the purposes of paragraph (1)(a). 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. Example: KJW Finance Corporation, a company that is an Australian entity, held assets valued at $130 million on the first day of an income year. On the last day of each quarterly period for that year it held assets valued at $140 million, $120 million, $110 million and $100 million respectively. Adding these amounts and dividing the result by 5 gives the average value of its assets for that year, which is $120 million. Quarterly period (3) The quarterly periods of the income year are: (a) the period consisting of the first, second and third months of that year; and (b) each successive period of 3 months that occurs after that period during that year. (4) This is the method statement for the purposes of paragraph (1)(b): 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. Example: TW Corporation, a company that is an Australian entity, adopts a weekly interval for the purposes of this subsection. The measurement period is a period of 12 weeks. On the first day of that period it had $70 million of debt capital. Its debt capital was $80 million on the last day of each of the first 7 weeks, and $95 million on the last day of the remaining 5 weeks. Adding these amounts and dividing the result by 13 (the number of measurement days) gives the average value of its debt capital for that period, which is $85 million. Regular intervals (5) The regular intervals for the measurement period are: (a) a period which consists of a fixed number of days or months (not less than one day and not more than 3 months) adopted by the entity and begins at the start of the first day of the measurement period; and (b) each successive period of the same duration that occurs during the measurement period. Note: Examples of a regular interval therefore include a daily, weekly, fortnightly, monthly or quarterly interval. (6) The entity must use the same regular intervals when calculating the average values of different matters under subsection (4) for that period.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-675 — Amount to be expressed in Australian currency

(1) For the purposes of this Division, an amount (including a value used in a calculation under this Division) is to be expressed in Australian currency. (2) An entity must comply with the * accounting standards in converting an amount into Australian currency. (3) Subsection (2) has effect whether the * accounting standard would otherwise apply to the entity or not.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-680 — Valuation of assets, liabilities and equity capital

(1) For the purposes of this Division, an entity must comply with the * accounting standards in determining what are its assets and liabilities and in calculating: (a) the value of its assets; and (b) the value of its liabilities (including its * debt capital); and (c) the value of its * equity capital. Note: This requirement to comply with the accounting standards is modified in certain cases (see sections 820 ‑ 310 and 820 ‑ 682). (1A) In particular, for the purposes of this Division, the entity has an asset or liability at a particular time if, and only if, according to the * accounting standards, the asset or liability can or must be recognised at that time. Note: This application of the accounting standards is modified in certain cases (see section 820 ‑ 682). (2) If: (a) an entity is required by an Australian law to prepare financial statements for a period in accordance with the * accounting standards; and (b) a matter mentioned in subsection (1) is determined or calculated in accordance with the accounting standards for the purposes of the financial statements in relation to the period; then, for the purposes of this Division, the matter is to be determined or calculated in relation to the period, or any part of the period, in the same way as it is determined or calculated in the financial statements. (2A) If: (a) a period in relation to which a matter mentioned in subsection (1) is determined or calculated (the current period ) is not the same as a period in relation to which paragraphs (2)(a) and (b) are satisfied; and (b) the current period overlaps with one or more periods in relation to which paragraphs (2)(a) and (b) are satisfied; then, for the purposes of this Division, the matter is to be determined or calculated in relation to the current period in the same way as it is determined or calculated in the financial statements for the most recent of the overlapping periods. Accounting standards need not otherwise apply to the entity (3) Subsection (1) has effect whether the * accounting standard would otherwise apply to the entity or not.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 145 of 2008, effective Schedule 2: Royal Assent | Amended by No 90 of 2010, effective Sch 2, Sch 4 (items 5–8) and Sch 5 (items 1–3, 6–8): 29 June 2010 (s 2(1) item 3) | Amended by No 65 of 2019, effective Sch 1 (items 4–18): 1 Oct 2019 (s 2(1) item 2)

s 820-682 — Recognition of assets and liabilities—modifying application of accounting standards

Deferred tax assets and deferred tax liabilities (1) Despite subsections 820 ‑ 680(1), (1A) and (2), an entity must not recognise: (a) a deferred tax liability (within the meaning of the * accounting standards) as a liability for the purposes of this Division; or (b) a deferred tax asset (within the meaning of the accounting standards) as an asset for the purposes of this Division. Note: Subsections 820 ‑ 680(1) and (1A) require compliance with accounting standards. Surpluses and deficits in defined benefit superannuation plans (2) Despite subsections 820 ‑ 680(1), (1A) and (2), an entity must not recognise an amount relating to a defined benefit plan (within the meaning of the * accounting standards) as: (a) a liability for the purposes of this Division; or (b) an asset for the purposes of this Division. Note: Subsections 820 ‑ 680(1) and (1A) require compliance with accounting standards. Not applicable to ADIs (3) This section does not apply in relation to an entity for a period if, for the period, the entity is an * outward investing entity (ADI) or an * inward investing entity (ADI). Not applicable to records about Australian permanent establishments (4) This section does not apply for the purposes of section 820 ‑ 960.

Amendment history: Inserted by No 145 of 2008, effective Schedule 2: Royal Assent | Amended by No 65 of 2019, effective Sch 1 (items 4–18): 1 Oct 2019 (s 2(1) item 2)

s 820-685 — Valuation of debt capital

For the purposes of this Division, the regulations may make additional provisions for the valuation of the * debt capital of an entity.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-690 — Commissioner’s power

If the Commissioner considers that, in relation to a calculation under this Division, an entity has: (a) overvalued its assets; or (b) undervalued its liabilities (including its * debt capital); the Commissioner may, having regard to the * accounting standards and this Subdivision, substitute a value that the Commissioner considers is appropriate.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 145 of 2008, effective Schedule 2: Royal Assent

s 820-740 — What this Subdivision is about

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 financial 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 financial entity (non ‑ ADI)); • the method of working out the extent to which one entity is controlled by another entity for those purposes. Table of sections Australian controller of a foreign entity 820 ‑ 745 What is an Australian controlled foreign entity? 820 ‑ 750 What is an Australian controller of a controlled foreign company? 820 ‑ 755 What is an Australian controller of a controlled foreign trust? 820 ‑ 760 What is an Australian controller of a controlled foreign corporate limited partnership? Foreign controlled Australian entity 820 ‑ 780 What is a foreign controlled Australian entity? 820 ‑ 785 What is a foreign controlled Australian company? 820 ‑ 790 What is a foreign controlled Australian trust? 820 ‑ 795 What is a foreign controlled Australian partnership? Thin capitalisation control interest 820 ‑ 815 General rule about thin capitalisation control interest in a company, trust or partnership 820 ‑ 820 Special rules about calculating TC control interest held by an entity 820 ‑ 825 Special rules about calculating TC control interests held by a group of entities 820 ‑ 830 Special rules about determining percentage of TC control interest 820 ‑ 835 Commissioner’s power TC direct control interest, TC indirect control interest and TC control tracing interest 820 ‑ 855 TC direct control interest in a company 820 ‑ 860 TC direct control interest in a trust 820 ‑ 865 TC direct control interest in a partnership 820 ‑ 870 TC indirect control interest in a company, trust or partnership 820 ‑ 875 TC control tracing interest in a company, trust or partnership

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-745 — What is an Australian controlled foreign entity?

An Australian controlled foreign entity , in relation to a particular time, is an entity that is any of the following at that time: (a) a * controlled foreign company (except a * corporate limited partnership); (b) a * controlled foreign trust; (c) a * controlled foreign corporate limited partnership.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-750 — What is an Australian controller of a controlled foreign company?

An entity is an Australian controller of a * controlled foreign company mentioned in paragraph 820 ‑ 745(a) at a particular time if, and only if, at that time: (a) that entity is an * Australian entity holding a * TC control interest in the controlled foreign company that is 10% or more; or (b) all of the following subparagraphs apply: (i) the controlled foreign company is such a company because of paragraph 340(c) of the Income Tax Assessment Act 1936 ; (ii) not more than 5 Australian entities, including that entity, control that controlled foreign company (either alone or together with * associate entities and whether or not any associate entity is also an Australian entity); (iii) that entity holds a * TC control interest in the controlled foreign company that is at least 1%. Note: A corporate limited partnership that is a foreign entity may be a controlled foreign corporate limited partnership, see section 820 ‑ 760.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-755 — What is an Australian controller of a controlled foreign trust?

An entity is an Australian controller of a * controlled foreign trust at a particular time if, and only if, at that time, the entity is an * Australian entity holding a * TC control interest in the trust that is 10% or more.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-760 — What is an Australian controller of a controlled foreign corporate limited partnership?

Australian controller of a controlled foreign corporate limited partnership (1) An entity is an Australian controller of a * controlled foreign corporate limited partnership at a particular time if, and only if, at least one of the following paragraphs applies to the entity at that time: (a) the entity is an * Australian entity that is a * general partner of the partnership; (b) the entity is an Australian entity holding a * TC control interest in the partnership that is 10% or more. Controlled foreign corporate limited partnership (2) A * corporate limited partnership is a controlled foreign corporate limited partnership at a particular time if, and only if, at that time: (a) it is not an * Australian entity; and (b) at least one of the following subparagraphs applies to it: (i) at least one * general partner of the partnership is an * Australian entity or an * Australian controlled foreign entity; (ii) not more than 5 Australian entities (each of which holds a * TC control interest in the partnership that is at least 1%) hold a total of TC control interests in the partnership that is 50% or more.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-780 — What is a foreign controlled Australian entity?

A foreign controlled Australian entity , in relation to a particular time, is an entity that is any of the following at that time: (a) a * foreign controlled Australian company; (b) a * foreign controlled Australian trust; (c) a * foreign controlled Australian partnership.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-785 — What is a foreign controlled Australian company?

(1) A company (except a * corporate limited partnership) is a foreign controlled Australian company (or an FCAC ) at a particular time if, and only if, at that time, it is an * Australian entity to which at least one of the following paragraphs applies: (a) not more than 5 * foreign entities (each of which holds a * TC control interest in the company that is at least 1%) hold a total of TC control interests in the company that is 50% or more; (b) a foreign entity holds a TC control interest in the company that is 40% or more, and no other entity or entities (except an * associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the company; (c) not more than 5 foreign entities control the company (whether or not with associate entities and whether or not any associate entity is a foreign entity). Note: A corporate limited partnership that is an Australian entity may be a foreign controlled Australian partnership, see section 820 ‑ 795. Exception (2) Despite subsection (1), a company is not an FCAC at a particular time if, at that time: (a) the company would, apart from this subsection, be an FCAC only because of paragraph (1)(a) or (b); but (b) the total of the following interests would be less than 20% if paragraphs 820 ‑ 875(2)(a) and (b) were disregarded: (i) the * TC direct control interest in the company held by the * foreign entity or entities mentioned in paragraph (1)(a) or (b); (ii) the * TC indirect control interest in the company held by the foreign entity or entities; (iii) the TC direct control interests in the company held by any * associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)); (iv) the TC indirect control interests in the company held by the entity’s associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)). Note: Paragraphs 820 ‑ 875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-790 — What is a foreign controlled Australian trust?

(1) A trust is a foreign controlled Australian trust (or an FCAT ) at a particular time if, and only if, at that time, it is an * Australian trust to which at least one of the following paragraphs applies: (a) not more than 5 * foreign entities (each of which holds a * TC control interest in the trust that is at least 1%) hold a total of TC control interests in the trust that is 50% or more; (b) a foreign entity holds a TC control interest in the trust that is 40% or more, and no other entity or entities (except an * associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the trust; (c) all of the following subparagraphs apply to the trust: (i) at least one of the objects or beneficiaries of the trust is a foreign entity; (ii) there has been at least one distribution of income or capital of the trust made to such an object or beneficiary (whether directly or indirectly) during the income year in which that particular time occurs, or during the preceding 2 income years; (iii) the total TC control interests in the trust that are held by all its beneficiaries that are * Australian entities do not exceed 50%; (d) a foreign entity is in a position to control the trust (see subsection (2)). (2) A * foreign entity is in a position to control a trust if, and only if: (a) the entity, or an * associate entity of the entity, whether alone or with other associate entities (the relevant entity ), has the power to obtain the beneficial enjoyment of the trust’s capital or income (whether or not by exercising its power of appointment or revocation, and whether with or without another entity’s consent); or (b) the relevant entity is able to control the application of the trust’s capital or income in any manner (whether directly or indirectly); or (c) the relevant entity is able to do a thing mentioned in paragraph (a) or (b) under a * scheme; or (d) a trustee of the trust is accustomed or is under an obligation (whether formally or informally), or might reasonably be expected, to act in accordance with the relevant entity’s directions, instructions or wishes; or (e) the relevant entity is able to remove or appoint a trustee of the trust. Exception (3) Despite subsection (1), a trust is not an FCAT at a particular time if, at that time: (a) the trust would, apart from this subsection, be an FCAT only because of paragraph (1)(a) or (b); but (b) the total of the following interests would be less than 20% if paragraphs 820 ‑ 875(2)(a) and (b) were disregarded: (i) the * TC direct control interest in the trust held by the * foreign entity or entities mentioned in paragraph (1)(a), (b) or (c); (ii) the * TC indirect control interest in the trust held by the foreign entity or entities; (iii) the TC direct control interests in the trust held by any * associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)); (iv) the TC indirect control interests in the trust held by the entity’s associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)). Note: Paragraphs 820 ‑ 875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-795 — What is a foreign controlled Australian partnership?

Corporate limited partnership (1) A * corporate limited partnership is a foreign controlled Australian partnership (or an FCAP ) at a particular time if, and only if, at that time: (a) it is an * Australian entity; and (b) at least one of the following subparagraphs applies to it: (i) not more than 5 * foreign entities (each of which holds a * TC control interest in the partnership that is at least 1%) hold a total of TC control interests in the partnership that are 50% or more; (ii) at least one * general partner of the partnership is a foreign entity or a * foreign controlled Australian entity. Partnership that is not a corporate limited partnership (2) A partnership other than a * corporate limited partnership is a foreign controlled Australian partnership (or an FCAP ) at a particular time if, and only if, at that time: (a) at least one of the partners is an * Australian entity; and (b) at least one of the following subparagraphs applies to it: (i) not more than 5 * foreign entities (each of which holds a * TC control interest in the partnership that is at least 1%) hold a total of TC control interests in the partnership that is 50% or more; (ii) a foreign entity holds a TC control interest in the partnership that is 40% or more, and no other entity or entities (except an * associate entity of the foreign entity or entities including the foreign entity or its associate entities) control the partnership. Exception (3) Despite subsections (1) and (2), a partnership is not an FCAP at a particular time if, at that time: (a) the partnership would, apart from this subsection, be an FCAP only because of subparagraph (1)(b)(i), (2)(b)(i) or (ii); but (b) the total of the following interests would be less than 20% if paragraphs 820 ‑ 875(2)(a) and (b) were disregarded: (i) the * TC direct control interest in the partnership held by the * foreign entity or entities mentioned in subparagraph (1)(b)(i), (2)(b)(i) or (ii); (ii) the * TC indirect control interest in the partnership held by the foreign entity or entities; (iii) the TC direct control interests in the partnership held by any * associate entities of the foreign entity or entities (other than any TC direct control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)); (iv) the TC indirect control interests in the partnership held by the entity’s associate entities (other than any TC indirect control interests that have been taken into account in calculating the interest mentioned in subparagraph (ii)). Note: Paragraphs 820 ‑ 875(2)(a) and (b) set out special rules under which an entity is taken to hold a TC control tracing interest in another entity that is equal to 100%, which could then be taken into account in calculating a TC indirect control interest.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13)

s 820-815 — General rule about thin capitalisation control interest in a company, trust or partnership

Meaning of TC control interest (1) The thin capitalisation control interest (or TC control interest ) that an entity holds in a company, trust or partnership at a particular time is the total of the following interests: (a) the * TC direct control interest (if any) held by the entity in the company, trust or partnership at that time; (b) the * TC indirect control interest (if any) held by the entity in the company, trust or partnership at that time; (c) the TC direct control interests (if any) held by the entity’s * associate entities in the company, trust or partnership at that time; (d) the TC indirect control interests (if any) held by the entity’s associate entities in the company, trust or partnership at that time. This section has effect subject to sections 820 ‑ 820 to 820 ‑ 835 (which set out special rules to avoid double counting). Note: For the rules about a TC direct control interest, see sections 820 ‑ 855 to 820 ‑ 865. For the rules about a TC indirect control interest, see sections 820 ‑ 870 to 820 ‑ 875. (2) This section does not apply to an * associate entity of the entity if: (a) the associate entity is a * foreign entity and the associate entity is such an associate entity only because of subsection 820 ‑ 905(3A); or (b) the associate entity is such an associate entity only because of subsection 820 ‑ 905(3B).

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-820 — Special rules about calculating TC control interest held by an entity

(1) This section applies for the purposes of calculating the * TC control interest that an entity holds in a company, trust or partnership. (2) Disregard a * TC indirect control interest held by the entity to the extent to which it is calculated by reference to: (a) a * TC direct control interest taken into account under paragraph 820 ‑ 815(c); or (b) a TC indirect control interest taken into account under paragraph 820 ‑ 815(d). (3) Disregard a * TC indirect control interest held by an * associate entity of the entity to the extent to which it is calculated by reference to: (a) a * TC direct control interest taken into account under paragraph 820 ‑ 815(a) or (c); or (b) a TC indirect control interest taken into account under paragraph 820 ‑ 815(b) or (d). (3A) Subsection (3) does not apply to an * associate entity of the entity if: (a) the associate entity is a * foreign entity and the associate entity is such an associate entity only because of subsection 820 ‑ 905(3A); or (b) the associate entity is such an associate entity only because of subsection 820 ‑ 905(3B). (4) Take into account only one of the following things if both would otherwise be counted in calculating the * TC control interest: (a) the holding of a * TC direct control interest by the entity or any other entity; (b) an entitlement to acquire that TC direct control interest. (5) The operation of this section in relation to an entity does not prevent the operation of section 820 ‑ 825 in relation to a group of entities that includes that entity.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-825 — Special rules about calculating TC control interests held by a group of entities

(1) This section applies for the purposes of calculating the total * TC control interests that a group of entities holds in a company, trust or partnership. (2) Take into account a particular * TC direct control interest or * TC indirect control interest only once if it would otherwise be counted more than once because the entity holding it is an * associate entity of one or more entities in the group. (2A) Subsection (2) does not apply to an * associate entity of one or more entities in the group if: (a) the associate entity is a * foreign entity and the associate entity is such an associate entity only because of subsection 820 ‑ 905(3A); or (b) the associate entity is such an associate entity only because of subsection 820 ‑ 905(3B). (3) Take into account only one of the following things if both of them would otherwise be counted in calculating the total * TC control interests: (a) the holding of a * TC direct control interest by an entity; (b) an entitlement to acquire that TC direct control interest. (4) The operation of this section in relation to a group of entities does not prevent the operation of section 820 ‑ 820 in relation to an entity that is a member of that group.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-830 — Special rules about determining percentage of TC control interest

(1) This section applies for the purposes of determining whether an entity, or a group of entities, holds at least a particular percentage of * TC control interests for the purposes of a provision in this Subdivision. (2) If, apart from this subsection, an entity, or each of 2 or more entities, would hold a * TC direct control interest equal to 100%, or a * TC control tracing interest equal to 100%, in another entity (the controlled entity ): (a) only the entity, or one of the 2 or more entities, is to be taken to hold that particular interest in the controlled entity equal to 100%; and (b) another entity is not to be taken to hold that particular interest in the controlled entity (whether or not it would, apart from this subsection, hold that interest in the controlled entity equal to 100%).

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-835 — Commissioner’s power

For the purposes of this Subdivision, the Commissioner may decide: (a) which one of 2 things is to be taken into account for the purposes of subsection 820 ‑ 820(4) or subsection 820 ‑ 825(3); or (b) which one of 2 or more entities is to be chosen for the purposes of paragraph 820 ‑ 830(2)(a).

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-855 — TC direct control interest in a company

(1) A thin capitalisation direct control interest (or a TC direct control interest ) that an entity holds in a company (except a * corporate limited partnership) at a particular time is the percentage of the direct control interest (if any) that the entity holds in the company at that time under the provisions applied by subsection (2). Note: For the TC direct control interest that an entity holds in a corporate limited partnership, see section 820 ‑ 865. (2) For the purposes of subsection (1), provisions of Part X of the Income Tax Assessment Act 1936 are applied with the modifications set out in the following table. Modifications of provisions in Part X of the Income Tax Assessment Act 1936 Item Provisions Modifications 1 Section 350 (including any other provision in Part X of the Income Tax Assessment Act 1936 that defines a term used in the section) The section applies for the purposes of this Subdivision rather than only for the purposes of Part X of the Income Tax Assessment Act 1936 2 Subsections 350(6) and (7) If section 350 is used for the purposes of determining whether or not a company is a * foreign controlled Australian company, the subsections apply as if subsection (6) referred to * foreign entities and foreign entity rather than * Australian entities and Australian entity If section 350 is used for the purposes of determining whether or not an entity is an * Australian controller of a * controlled foreign company, the subsections do not apply 3 Section 350 A reference to an * associate is taken to be a reference to an * associate entity

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-860 — TC direct control interest in a trust

(1) A thin capitalisation direct control interest (or a TC direct control interest ) that an entity holds in a trust at a particular time is the percentage of the direct control interest (if any) that the entity holds in the trust at that time under the provisions applied by subsection (2). (2) For the purposes of subsection (1), provisions of Part X of the Income Tax Assessment Act 1936 are applied with the modifications set out in the following table. Modifications of provisions in Part X of the Income Tax Assessment Act 1936 Item Provisions Modifications 1 Section 351 (including any other provision in Part X of the Income Tax Assessment Act 1936 that defines a term used in the section) The section applies for the purposes of this Subdivision rather than only for the purposes of Part X of the Income Tax Assessment Act 1936 2 Subsections 351(3) and (4) The subsections do not apply (3) In addition, for the purposes of determining whether or not an entity (other than a trust mentioned in paragraph (a) or (b)) is a * foreign controlled Australian entity: (a) if a trust is covered by paragraph 820 ‑ 790(1)(c)—a foreign entity that is an object of the trust at a particular time is taken to hold, at that time, a TC direct control interest in the trust that is equal to 100%; and (b) if a trust is covered by paragraph 820 ‑ 790(1)(d)—a foreign entity that is in a position to control the trust at a particular time is taken to hold, at that time, a * TC direct control interest in the trust that is equal to 100%. Note: The foreign entity therefore holds a TC control tracing interest in the trust (see section 820 ‑ 875). That interest may then be taken into account in calculating any TC indirect control interest that the foreign entity holds in another entity in relation to which the trust is an interposed entity (see section 820 ‑ 870). As a result, that other entity may become a foreign controlled Australian entity.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-865 — TC direct control interest in a partnership

A thin capitalisation direct control interest (or a TC direct control interest ) that an entity holds in a partnership at a particular time is whichever of the following percentages is applicable, and if there are 2 or more such percentages, the greatest of them: (a) in the case of a * corporate limited partnership—100% if the entity is a * general partner of the partnership; (b) in the case of a partnership that is not a corporate limited partnership—the percentage of the control of voting power in the partnership that the entity has at that time; (c) in any case—the percentage that the entity holds, or is entitled to acquire, at that time, of any of the following: (i) the total amount of assets or capital contributed to the partnership; (ii) the total rights of partners to distributions of capital, assets or profits on the dissolution of the partnership; (iii) the total rights of partners to distributions of capital, assets or profits otherwise than on the dissolution of the partnership.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-870 — TC indirect control interest in a company, trust or partnership

What is a TC indirect control interest? (1) An entity holds a thin capitalisation indirect control interest (or a TC indirect control interest ) in a company, trust or partnership at a particular time if, and only if: (a) there is an interposed entity, or a continuous series of at least 2 interposed entities, between that entity and the company, trust or partnership; and (b) the interposed entity, or each of the interposed entities, is: (i) a * foreign controlled Australian entity if this section is used for the purposes of determining whether or not an entity is a foreign controlled Australian entity; or (ii) an * Australian controlled foreign entity if this section is used for the purposes of determining whether or not an entity is an Australian controlled foreign entity or an * Australian controller of such an entity. Note: In the case of a continuous series of interposed entities between an entity and a company, trust or partnership, the entity must hold a TC control tracing interest in the first interposed entity (see subsection (2)). In addition, under subsection (2), each interposed entity in the series must hold a TC control tracing interest in the next interposed entity (except in the case of the last one, which holds a TC control tracing interest in the company, trust or partnership). What is an interposed entity? (2) For the purposes of this section, an entity (the middle entity ) is interposed between 2 other entities at a particular time if, and only if, at that time: (a) the first of those 2 entities holds a * TC control tracing interest in the middle entity; and (b) the middle entity holds a TC control tracing interest in the second of those 2 entities. Note: For the rules about a TC control tracing interest, see section 820 ‑ 875. How to calculate a TC indirect control interest (3) The * TC indirect control interest that an entity (the top entity ) holds in a company, trust or partnership at a particular time is calculated in accordance with subsection (4), (5) or (6) (as appropriate). One interposed entity only (4) The * TC indirect control interest is the result of applying the following method statement if there is only one interposed entity between the top entity and 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 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. 2 interposed entities (5) The * TC indirect control interest is the result of applying the following method statement if there are 2 interposed entities between the top entity and 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. More than 2 interposed entities (6) The * TC indirect control interest is the result of applying the following method statement if there are more than 2 interposed entities between the top entity and 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.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-875 — TC control tracing interest in a company, trust or partnership

(1) A thin capitalisation control tracing interest (or a TC control tracing interest ) that an entity holds in a company, trust or a partnership at a particular time is equal to the * TC direct control interest in the company, trust or partnership that the entity holds at that time. (2) Despite subsection (1), an entity is taken to hold a * TC control tracing interest in a company, trust or partnership that is equal to 100% at a particular time if, at that time: (a) the entity and its * associate entities hold a total of * TC direct control interests in the company, trust or partnership that is 50% or more; or (b) the following subparagraphs apply: (i) the entity (the controlling entity ) and its associate entities hold a total of TC direct control interests that is 40% or more in the company, trust or partnership; (ii) no other entity or entities (except the controlling entity, its associate entities or entities including the controlling entity or its associate entities) control the company, trust or partnership; or (c) the entity (whether or not together with associate entities) controls the company, trust or partnership. (3) Paragraph (2)(b) does not apply if the * TC direct control interests mentioned in subparagraph (2)(b)(i) are held in a * corporate limited partnership.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-880 — What this Subdivision is about

Controlled foreign entity debt and controlled foreign entity equity are concepts used in this Division. This Subdivision sets out the meaning of each of these concepts. Table of sections 820 ‑ 881 Application 820 ‑ 885 What is controlled foreign entity debt ? 820 ‑ 890 What is controlled foreign entity equity ?

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-881 — Application

This Subdivision applies to: (a) an entity (the relevant entity ) that is a * general class investor, an * outward investing entity (non ‑ ADI), or an * outward investing entity (ADI), for a period (the relevant period ) that is all or a part of an income year; and (b) each entity ( controlled entity of the relevant entity ) that is an * Australian controlled foreign entity of which: (i) the relevant entity is an * Australian controller; or (ii) an * associate entity of the relevant entity is an Australian controller.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-885 — What is controlled foreign entity debt ?

(1) The relevant entity’s controlled foreign entity debt at a particular time during the relevant period is the total value of all the * debt interests held by the relevant entity at that time that satisfy all of the following: (a) the interests are * on issue at that time; (b) each of the interests was * issued by an entity that is a controlled entity of the relevant entity at that time; (c) each of the interests gives rise to a cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a). (2) For the purposes of subsection (1), take into account the value of a * debt interest issued by a controlled entity of the relevant entity only to the extent that the interest is not attributable to any of the following assets that are held by the controlled entity throughout the relevant period: (a) assets attributable to the controlled entity’s * Australian permanent establishments; (b) other assets that are held by the controlled entity for the purposes of producing assessable income of the controlled entity.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-890 — What is controlled foreign entity equity ?

(1) The relevant entity’s controlled foreign entity equity at a particular time during the relevant period is the total value of: (a) all the * equity interests that the entity holds, at that time, in entities that are controlled entities of the relevant entity at that time; and (b) all the * debt interests * on issue and held by the entity at that time that satisfy both of the following: (i) the interests were * issued by entities that are controlled entities of the relevant entity at that time; (ii) none of the interests gives rise to any cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a). (2) For the purposes of subsection (1), take into account the value of an * equity interest in, or a * debt interest issued by, a controlled entity of the relevant entity only to the extent that the interest is not attributable to any of the following assets that are held by the controlled entity throughout the relevant period: (a) assets attributable to the controlled entity’s * Australian permanent establishments; (b) other assets that are held by the controlled entity for the purposes of producing assessable income of the controlled entity.

Amendment history: Inserted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent

s 820-900 — What this Subdivision is about

This Subdivision sets out the meaning of various concepts about associate entities for the purposes of this Division. Table of sections 820 ‑ 905 Associate entity 820 ‑ 910 Associate entity debt 820 ‑ 915 Associate entity equity 820 ‑ 920 Associate entity excess amount

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))

s 820-905 — Associate entity

Meaning of associate entity (1) An entity (the first entity ) that is not an individual is an associate entity of another entity at a particular time if, at that time, the first entity is an * associate of that other entity and at least one of the following paragraphs applies: (a) that other entity holds an * associate interest of 50% or more in the first entity (see subsections (4) to (8)); (b) the first entity is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of that other entity in relation to: (i) the distribution or retention of the first entity’s profits; or (ii) the financial policies relating to the first entity’s assets, * debt capital or * equity capital; whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed entities. However, this subsection does not apply to the first entity in its capacity as the * responsible entity of a * registered scheme (see subsection (2A)). (1A) Subsection (1) does not apply if the other entity is any of the following: (a) a trustee of a * complying superannuation entity (other than a * self managed superannuation fund); (b) * wholly ‑ owned subsidiary of a complying superannuation entity (other than a self managed superannuation fund). (2) An entity (the first entity ) that is an individual is an associate entity of another entity at a particular time if, at that time: (a) the first entity is an * associate of that other entity; and (b) the first entity: (i) is accustomed or under an obligation (whether formal or informal); or (ii) might reasonably be expected; to act in accordance with the directions, instructions or wishes of that other entity in relation to the first entity’s financial affairs, whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed entities. (2A) An entity (the first entity ), in its capacity as the * responsible entity of a * registered scheme at a particular time, is an associate entity of another entity at that time if the first entity, in that capacity, is an * associate of that other entity at that time and at least one of the following paragraphs applies at that time: (a) that other entity holds an * associate interest of 50% or more in the registered scheme (see subsections (4) to (8)); (b) that other entity holds an associate interest of 20% or more in the registered scheme and the first entity, in that capacity, is accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of that other entity in relation to: (i) the distribution or retention of the profits of the registered scheme; or (ii) the financial policies relating to the assets, * debt capital or * equity capital of the registered scheme; whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed entities. Note: The first entity, in another capacity, may also be an associate entity of an entity under another provision of this section (see also section 960 ‑ 100). (2B) For the purposes of Subdivision 820 ‑ AA, and of sections 820 ‑ 910, 820 ‑ 915 and 820 ‑ 920, if the first entity mentioned in subsection (1) or (2A) is a trust (other than a * public trading trust) or a partnership: (a) treat the reference in paragraph (1)(a) or (2A)(a) to 50% as instead being a reference to 10%; and (b) if subsection (2C) applies—treat the other entity mentioned in subsection (1) or (2A) as holding an * associate interest in the first entity mentioned in that subsection of 10%; and (c) disregard subsection 318(5) of the Income Tax Assessment Act 1936 ; and (d) if subsection (2D) applies—in determining whether an entity is an * associate of another entity, treat the benefiting entity mentioned in that subsection as being a partner in the partnership. (2C) This subsection applies if: (a) the other entity mentioned in subsection (1) or (2A) holds an * associate interest in the first entity mentioned in that subsection of less than 10%; and (b) it is reasonable to conclude that the entity, or one of the entities, who created the circumstance described in paragraph (a) of this subsection did so for the principal purpose of, or for more than one principal purpose that included the purpose of, ensuring that the first entity will not be an * associate entity of the other entity. (2D) This subsection applies if: (a) a trust (other than a * public trading trust) is a partner in a partnership; and (b) another entity (the benefiting entity ) benefits under the trust (as determined in accordance with paragraph 318(6)(a) of the Income Tax Assessment Act 1936 ). (3) Subsection (1) or (2A) also has effect as if the first entity satisfies paragraph (b) of that subsection at a particular time if any of the following is expected to act in the manner mentioned in that paragraph at that time: (a) a director of the first entity if it is a company; (b) a partner of the first entity if it is a partnership; (c) the * general partner of the first entity if it is a * corporate limited partnership; (d) the trustee of the first entity if it is a trust; (e) a member of the first entity’s committee of management if it is an unincorporated association or body. (3A) If: (a) an entity (the first entity ) is an * associate entity of another entity (the head entity ) under subsection (1), (2), (2A) or (3) at a particular time; and (b) a third entity is also an associate entity of the head entity under subsection (1), (2), (2A) or (3) at that time; the first entity is an associate entity of the third entity at that time. (3B) If an entity (the first entity ) is an * associate entity of another entity under subsection (1), (2), (2A), (3) or (3A) at a particular time, that other entity is also an associate entity of the first entity at that time. (3C) However, an entity in its capacity as the * responsible entity of a * registered scheme (the responsible entity ) is not an * associate entity of another entity under subsection (3B) at a particular time if, at that time, the responsible entity: (a) would be an associate entity of that other entity under subsection (3B) (apart from the effect of this subsection); but (b) is not an associate entity of that other entity under subsection (2A). Associate interest in a company (except a corporate limited partnership) (4) An associate interest that an entity holds in a company (except a * corporate limited partnership) at a particular time is the percentage of the direct control interest (if any) that the entity holds in the company at that time under the provisions applied by subsection (5). (5) For the purposes of subsection (4), provisions of Part X of the Income Tax Assessment Act 1936 are applied with the modifications set out in the following table: Modifications of provisions in Part X of the Income Tax Assessment Act 1936 Item Provisions Modifications 1 Section 350 (including any other provision in Part X of the Income Tax Assessment Act 1936 that defines a term used in the section) The section applies for the purposes of this subsection rather than only for the purposes of Part X of the Income Tax Assessment Act 1936 2 Subsections 350(6) and (7) The subsections do not apply Associate interest in a trust (6) An associate interest that an entity holds in a trust at a particular time is the percentage of the direct control interest (if any) that the entity holds in the trust at that time under the provisions applied by subsection (7). (7) For the purposes of subsection (6), provisions of Part X of the Income Tax Assessment Act 1936 are applied with the modifications set out in the following table: Modifications of provisions in Part X of the Income Tax Assessment Act 1936 Item Provisions Modifications 1 Section 351 (including any other provision in Part X of the Income Tax Assessment Act 1936 that defines a term used in the section) The section applies for the purposes of this subsection rather than only for the purposes of Part X of the Income Tax Assessment Act 1936 2 Subsections 351(3) and (4) The subsections do not apply Associate interest in a partnership (8) An associate interest that an entity holds in a partnership at a particular time is whichever of the following percentages is applicable, and if there are 2 or more such percentages, the greatest of them: (a) in the case of a * corporate limited partnership—100% if the entity is a * general partner of the partnership; (b) in the case of a partnership that is not a corporate limited partnership—the percentage of the control of voting power in the partnership that the entity has at that time; (c) in any other case—the percentage that the entity holds, or is entitled to acquire, at that time, of any of the following: (i) the total amount of assets or capital contributed to the partnership; (ii) the total rights of partners to distributions of capital, assets or profits on the dissolution of the partnership; (iii) the total rights of partners to distributions of capital, assets or profits otherwise than on the dissolution of the partnership.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 34 of 2019, effective Sch 1 (items 1–5, 12, 13, 16), Sch 2, Sch 4 (items 3–6, 8, 9) and Sch 5 (items 1, 2, 5): 1 July 2019 (s 2(1) items 2, 3) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-910 — Associate entity debt

(1) This section applies to an entity (the relevant entity ) that is a * general class investor, an * outward investing financial entity (non ‑ ADI), or an * inward investing financial entity (non ‑ ADI), for a period (the relevant period ) that is all or a part of an income year. (2) This section also applies, for the relevant entity, to an * associate entity (a relevant associate entity ) of the relevant entity, if: (a) either: (i) the associate entity is an * outward investing financial entity (non ‑ ADI) or an * inward investment vehicle (financial), for the relevant period; or (ii) the associate entity is an * inward investor (financial) for the relevant period, and the condition in subsection (2A) of this section is satisfied; and (b) neither section 820 ‑ 35 ($2 million debt deductions threshold) nor section 820 ‑ 37 (exemption for entity with 90% Australian assets) prevents Subdivision 820 ‑ B, 820 ‑ C, 820 ‑ D or 820 ‑ E from disallowing any * debt deduction of the relevant associate entity for the income year; and (c) for some or all of the relevant period, the relevant associate entity does not meet the conditions in subsection 820 ‑ 39(3) (about exemption of certain special purpose entities); and (d) the relevant associate entity is not an * exempt entity for the income year. (2A) The condition referred to in subparagraph (2)(a)(ii) is that the relevant period consists of one or more periods each of which is either or both of these: (a) a period throughout which the * associate entity carries on its * business in Australia at or through one or more of its * Australian permanent establishments; (b) a period throughout which the associate entity holds any of the following assets: (i) assets that are attributable to the associate entity’s Australian permanent establishments; (ii) other assets that are held for the purposes of producing the associate entity’s assessable income. (3) The relevant entity’s associate entity debt at a particular time during the relevant period is the total value of all the * debt interests held by the relevant entity at that time that satisfy all of the following: (a) the interests are * on issue at that time; (b) each of the interests was * issued by a relevant associate entity; (c) each of the interests gives rise to costs: (i) that are * debt deductions, for an income year, of the relevant associate entity that issued the interest; and (ii) to the extent that the costs are not amounts mentioned in paragraph 820 ‑ 40(2)(c) and are costs ordinarily payable to an entity other than the relevant entity—that are assessable income of the relevant entity for an income year; (d) the terms and conditions for each of the interests are those that would apply if the relevant entity and the relevant associate entity that issued the interest were dealing at * arm’s length with each other. (4) For the purposes of subsection (3), take into account the value of a * debt interest issued by a * foreign entity only to the extent that the interest is attributable to any of the following assets that are held by the foreign entity throughout the relevant period: (a) assets that are attributable to the foreign entity’s * Australian permanent establishments; (b) other assets held by the foreign entity for the purposes of producing the foreign entity’s assessable income.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Repealed and substituted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-915 — Associate entity equity

(1) This section applies to an entity (the relevant entity ) that is an * outward investing financial entity (non ‑ ADI) or an * inward investing financial entity (non ‑ ADI) for a period (the relevant period ) that is all or a part of an income year. (2) This section also applies, for the relevant entity, to each entity ( relevant associate entity ) that is an * associate entity of the relevant entity and that is: (a) an * Australian entity; or (b) a * foreign entity that, throughout the relevant period, holds any of the following assets: (i) assets that are attributable to the foreign entity’s * Australian permanent establishments; (ii) other assets that are held for the purposes of producing the foreign entity’s assessable income. (3) The relevant entity’s associate entity equity at a particular time during the relevant period is the total value of: (a) all the * equity interests that the entity holds, at that time, in relevant associate entities; and (b) all the * debt interests * on issue and held by the relevant entity at that time that satisfy all of the following: (i) the interests were * issued by relevant associate entities; (ii) neither the value of each of the interests, nor any part of that value, is all or a part of any * cost ‑ free debt capital of the issuer of the interest at that time; (iii) none of the interests gives rise to any cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a); and (c) all the debt interests on issue and held by the relevant entity at that time that satisfy both of the following: (i) the interests were issued by relevant associate entities; (ii) each of the interests gives rise to a cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a), but the cost is not deductible from the assessable income of the issuer of the interest for any income year. (4) For the purposes of subsection (3), take into account the value of an * equity interest in, or a * debt interest issued by, a * foreign entity only to the extent that the interest is attributable to assets covered by subparagraph (2)(b)(i) or (ii) that are held by the foreign entity throughout the relevant period.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Repealed and substituted by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-920 — Associate entity excess amount

(1) This section applies to an entity (the relevant entity ) that is an * outward investing financial entity (non ‑ ADI) or an * inward investing financial entity (non ‑ ADI) for a period that is all or a part of an income year. (2) The relevant entity’s associate entity excess amount at a particular time during that period is the result of applying the method statement in this subsection. 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 . (3) An * associate entity’s premium excess amount at a particular time during that period is the result of applying the method statement in this subsection. In applying the method statement, disregard any amount that is attributable to an entity’s * overseas permanent establishments if it is an * outward investing financial entity (non ‑ ADI) at that time. 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 (d) the result of step 4 of the method statement in subsection 820 ‑ 110(2) 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 . (4) The * associate entity’s attributable safe harbour excess amount at a particular time during that period is the result of applying the method statement in this subsection. In applying the method statement, disregard any amount that is attributable to an entity’s * overseas permanent establishments if it is an * outward investing financial entity (non ‑ ADI) at that time. 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 the associate entity were an * outward investing financial entity (non ‑ ADI) or * inward investing financial entity (non ‑ ADI), as appropriate, for the period consisting only of 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. (5) For the purposes of the method statement in subsection (4), this subsection covers a * debt interest at a particular time if the interest satisfies all of the following: (a) the interest is * on issue at that time; (b) neither the value of the interest, nor any part of that value, is all or a part of any * cost ‑ free debt capital of the issuer of the interest at that time; (c) the interest does not give rise to any cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a). (6) For the purposes of the method statement in subsection (4), this subsection covers a * debt interest at a particular time if the interest satisfies both of the following: (a) the interest is * on issue at that time; (b) the interest gives rise to a cost, at any time, that is covered by paragraph 820 ‑ 40(1)(a), but the cost is not deductible from the assessable income of the issuer of the interest for any income year.

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b)) | Amended by No 53 of 2002, effective Schedules 3 and 4: 1 July 2002 Remainder: Royal Assent | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 110 of 2014, effective Sch 1 and Sch 2 (items 2–5, 13–23): 17 Oct 2014 (s 2(1) item 2) Sch 3, Sch 4 (items 1, 3) and Sch 5 (items 16–67, 74–76, 84–91, 98–121): 16 Oct 2014 (s 2(1) items 3–5, 7) | Amended by No 23 of 2024, effective sch 2 (items 3 ‑ 142, 144 ‑ 146): 1 July 2024 (s 2(1) item 3)

s 820-925 — What this Subdivision is about

This Subdivision provides for the meanings of an equity interest in a trust or partnership for the purposes of this Division. Table of sections 820 ‑ 930 Equity interest in a trust or partnership

Amendment history: Inserted by No 162 of 2001, effective Sch 1 (items 1, 14–16) and Sch 2: 1 July 2001 (s 2(1)) Sch 1 (items 17, 19): 15 July 2001 (s 2(2)(b)) Sch 1 (item 18): 1 July 2002 (s 2(3)(b))