Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p5
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 5/11)
Character Range: 26400–29092

of all the assets of the entity.
           Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity equity of the entity, other than associate entity equity that is *controlled foreign entity equity of the entity.
           Step 3. Reduce the result of step 2 by the average value, for that year, of all the *controlled foreign entity debt of the entity.
           Step 4. Reduce the result of step 3 by the average value, for that year, of all the *controlled foreign entity equity of the entity.
           Step 5. Reduce the result of step 4 by the average value, for that year, of all the *non‑debt liabilities of the entity.
           Step 6. Reduce the result of step 5 by the amount (the average on‑lent amount) which is the average value, for that year, of the entity's *on‑lent amount (other than *controlled foreign entity debt of the entity). If the result of this step is a negative amount, it is taken to be nil.
           Step 7. Multiply the result of step 6 by 3/4.
           Step 8. Add to the result of step 7 the average on‑lent amount.
           Step 9. Reduce the result of step 8 by the average value, for that year, of all the *associate entity debt of the entity, other than associate entity debt that is *controlled foreign entity debt of the entity.
           Step 10. Add to the result of step 9 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the adjusted on‑lent amount.
Example: GLM Limited, a company that is an Australian entity, has an average value of assets (other than assets attributable to its overseas permanent establishments) of $160 million.

 The average values of its relevant associate entity equity, controlled foreign entity debt, controlled foreign entity equity, non‑debt liabilities and on‑lent amount are $5 million, $9 million, $6 million, $5 million and $35 million respectively. Deducting these amounts from the result of step 1 (through applying steps 2 to 6) leaves $100 million. Multiplying $100 million by 3/4 results in $75 million. Adding the average on‑lent amount of $35 million results in $110 million. Reducing the result of step 8 by the associate entity debt amount of $5 million equals $105 million. As the company does not have any associate entity excess amount, the adjusted on‑lent amount is therefore $105 million.

820‑105  Arm's length debt amount

 (1) The arm's length debt amount is a notional amount that, having regard to the factual assumptions set out in subsection (2) and the relevant factors mentioned in subsection (3), would satisfy both paragraphs (a) and (b):
 (a) the amount represents a