Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 1/11)
Character Range: 6998535–7001496

2                     an entity not covered by column 1 of item 1                                                                                                                             the conditions do not operate solely at or through an *Australian permanent establishment of the entity.

 (4) For the purposes of the table in subsection (3), treat any entity that is an Australian resident as not being an Australian resident if:
 (a) the entity is also a resident in a country that has entered into an *international tax agreement with Australia containing a *residence article; and
 (b) under that residence article, the entity is taken, for the purposes of the agreement, to be a resident only of that other country.

Nil amounts
 (5) For the purposes of this section and section 815‑145:
 (a) treat an entity that has no taxable income for an income year as having a taxable income for the year of a nil amount; and
 (b) treat an entity that has no loss of a particular *sort for an income year as having a loss of that sort for the year of a nil amount; and
 (c) treat an entity that has no *tax offsets for an income year as having tax offsets for the year of a nil amount.

Meaning of residence article
 (6) A residence article is:
 (a) Article 4 of the United Kingdom convention (within the meaning of the International Tax Agreements Act 1953); or
 (b) a corresponding provision of another *international tax agreement.

815‑125  Meaning of arm's length conditions
 (1) The arm's length conditions, in relation to conditions that operate between an entity and another entity, are the conditions that might be expected to operate between independent entities dealing wholly independently with one another in comparable circumstances.

Most appropriate and reliable method to be used
 (2) In identifying the *arm's length conditions, use the method, or the combination of methods, that is the most appropriate and reliable, having regard to all relevant factors, including the following:
 (a) the respective strengths and weaknesses of the possible methods in their application to the actual conditions;
 (b) the circumstances, including the functions performed, assets used and risks borne by the entities;
 (c) the availability of reliable information required to apply a particular method;
 (d) the degree of comparability between the actual circumstances and the comparable circumstances, including the reliability of any adjustments to eliminate the effect of material differences between those circumstances.
Note: The possible methods include the methods set out in the documents mentioned in section 815‑135 (about relevant guidance material).

Comparability of circumstances
 (3) In identifying comparable circumstances for the purpose of this section, regard must be had to all relevant factors, including the following:
 (a) the functions performed, assets used and risks borne by the entities;
 (b) the characteristics of any property