Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_3:p3
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 3/5)
Character Range: 94670–97486

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)