Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_9:p1
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 9 (pt 1/4)
Character Range: 6207–9025

9                Subdivision 820‑L           special record keeping requirements for the purposes of this Division.

[This is the end of the Guide.]

Subdivision 820‑A—Preliminary

Table of sections

820‑30 Object of Division
820‑35 Application—$250,000 threshold
820-37 Application—assets threshold
820‑40 Meaning of debt deduction

820‑30  Object of Division

  The Object of this Division is to ensure that the following entities do not reduce their tax liabilities by using an excessive amount of *debt capital to finance their Australian operations:
 (a) *Australian entities that operate internationally;
 (b) Australian entities that are foreign controlled;
 (c) *foreign entities that operate in Australia.

820‑35  Application—$250,000 threshold

  Subdivision 820‑B, 820‑C, 820‑D or 820‑E does not apply to disallow any *debt deduction of an entity for an income year if the total debt deductions of that entity and all its *associate entities for that year are $250,000 or less.

820‑37  Application—assets threshold

  Subdivision 820‑B, 820‑C, 820‑D or 820‑E does not apply to disallow any *debt deduction of an entity for an income year if:
 (a) the entity is an *outward investing entity (non‑ADI) or an *outward investing entity (ADI) for a period that is all or any part of that year; and
 (b) the entity is not also an *inward investing entity (non‑ADI) or an *inward investing entity (ADI) for all or any part of that period; and
 (c) the result of applying the following formula is equal to or greater than 0.9:
where:

average Australian assets of an entity is the average value, for that year, of all the assets of the entity, other than:
 (a) assets attributable to the entity's *overseas permanent establishment; or
 (b) assets comprised by the entity's *controlled foreign entity equity; or
 (c) assets comprised by the entity's *controlled foreign entity debt.

average total assets of an entity means the average value, for that year, of all the assets of the entity.

820‑40  Meaning of debt deduction

 (1) Debt deduction, of an entity and for an income year, is a cost incurred by the entity in relation to a *debt interest issued by the entity, to the extent to which:
 (a) the cost is:
 (i) interest, an amount in the nature of interest, or any other amount that is calculated by reference to the time value of money; or
 (ii) the difference between the *financial benefits received, or to be received, by the entity under the *scheme giving rise to the debt interest and the financial benefits provided, or to be provided, under that scheme; or
 (iii) any amount directly incurred in obtaining or maintaining the financial benefits received, or to be received, by the entity under the scheme giving rise to the debt interest; or
 (iv) any other expense incurred by the entity that