Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p8
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 8/11)
Character Range: 33987–36710

amount that the Commissioner considers better reflects those assumptions and factors.

820‑110  Worldwide gearing debt amount

Outward investor (general)

 (1) If the entity is an *outward investor (general) for the income year, the worldwide gearing debt amount is the result of applying the method statement in this subsection.

      Method statement
           Step 1. Divide the average value of all the entity's *worldwide debt for the income year by the average value of all the entity's *worldwide equity for that year.
           Step 2. Multiply the result of step 1 by 12/10.
           Step 3. Add 1 to the result of step 2.
           Step 4. Divide the result of step 2 by the result of step 3.
           Step 5. Multiply the result of step 4 in this method statement by the result of step 6 in the method statement in section 820‑95.
           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 worldwide gearing debt amount.
Example: AK Pty Ltd, a company that is an Australian entity, has an average value of worldwide debt of $83.4 million and an average value of worldwide equity of $27 million. The result of applying steps 1 and 2 is therefore 3.706. Dividing 3.706 by 4.706 (through applying steps 3 and 4) and multiplying the result by $70 million (which is the result of step 6 in the method statement in section 820‑95) equals $55.13 million. As the average value of the company's associate entity excess amount is $4.5 million, the worldwide gearing debt amount is therefore $59.63 million.

Outward investor (financial)

 (2) If the entity is an *outward investor (financial) for that year, the worldwide gearing debt amount is the result of applying the method statement in this subsection.

      Method statement
           Step 1. Divide the average value of all the entity's *worldwide debt for the income year by the average value of all the entity's *worldwide equity for that year.
           Step 2. Multiply the result of step 1 by 12/10.
           Step 3. Add 1 to the result of step 2.
           Step 4. Divide the result of step 2 by the result of step 3.
           Step 5. Multiply the result of step 4 in this method statement by the result of step 7 in the method statement in subsection 820‑100(2).
           Step 6. Add to the result of step 5 the average value, for that year, of the entity's *zero‑capital amount (other than any zero‑capital amount that is attributable to the entity's *overseas permanent establishments).
           Step 7. Add to the result of step 6 the average value, for that year, of the entity's *associate entity excess amount. The result of