Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p1
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 1/11)
Character Range: 46596–49456

4                                  *foreign entity throughout a period that is all or a part of an income year                        is a *financial entity throughout that period                            inward investor (financial) for that period

Note 1: To determine whether an entity is a foreign controlled Australian entity, see Subdivision 820‑H.

Note 2: The rules that apply to these 4 types of entities are different in some instances. For example, see sections 820‑195 to 820‑210.

Note 3: An entity covered by item 3 or 4 of the table may be required to keep certain records, see Subdivision 820‑L.

Adjusted average debt

 (3) The entity's adjusted average debt for an income year is the result of applying the method statement in this subsection.

      Method statement
           Step 1. Work out the average value, for that year (the relevant year), of all the *debt capital of the entity that gives rise to *debt deductions of the entity for that or any other income year.
           Step 2. Reduce the result of step 1 by the average value, for the relevant year, of:

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

           Step 3. If the entity is a *financial entity throughout the relevant year, add to the result of step 2 the average value, for that year, of the entity's *zero‑capital amount, to the extent that:

                (a) the zero‑capital amount is attributable to the securities loan arrangements mentioned in step 1 of the method statement in subsection 820‑942(1); and
                (b) the securities loan arrangements are not *debt interests.

           Step 4. Add to the result of step 3 the average value, for the relevant year, of any *debt capital of the entity that does not give rise to any *debt deductions of the entity for that or any other income year, if:

                (a) the debt capital is comprised of *debt interests issued to another entity that remain *on issue; and
                (b) that other entity is an *outward investing entity (non‑ADI) or *inward investing entity (non‑ADI) for a period that is, or includes, all or a part of the relevant year; and
                (c) for the purposes of the application of this Division to the entities, and in relation to only that part of the relevant year that falls within that period, the entities do not use the same *valuation days and the same number of valuation days to calculate the average value of their respective debt capital.