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: 56696–59446

Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity debt of the entity that has arisen because of the Australian investments.
           Step 3. Reduce the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity that has arisen because of the Australian investments.
           Step 4. Reduce the result of step 3 by the average value, for that year, of all the *non‑debt liabilities of the entity that have arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.
           Step 5. Multiply the result of step 4 by 3/4.
           Step 6. Add to the result of step 5 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the safe harbour debt amount.
Example: RJ Corporation is a company that is not an Australian entity. The average value of its Australian investments is $100 million.

 The average value of its relevant associate entity debt, associate entity equity and non‑debt liabilities is $10 million, $5 million and $5 million respectively. Deducting those amounts from the result of step 1 leaves $80 million. Multiplying $80 million by 3/4 results in $60 million. As the company does not have any associate entity excess amount, the safe harbour debt amount is therefore $60 million.

820‑210  Safe harbour debt amount—inward investor (financial)

 (1) If the entity is an *inward investor (financial) for that year, the safe harbour debt amount is the lesser of the following amounts:
 (a) the *total debt amount (worked out under subsection (2));
 (b) the *adjusted on‑lent amount (worked out under subsection (3)).
However, if the 2 amounts are equal, it is the total debt amount.

Total debt amount

 (2) The total debt 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 of the following assets of the entity (the Australian investments):

                (a) assets that are attributable to the entity's *Australian permanent establishments;
                (b) other assets that are held for the purposes of producing the entity's assessable income.

           Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity debt of the entity that has arisen because of the Australian investments.
           Step 3. Reduce the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity that has arisen because of the Australian investments.
           Step 4. Reduce the result of step 3 by the average