Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p1
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 1/2)
Character Range: 41967–44940

4                                            Section 820‑115             adjusted average debt is taken to have the meaning given by subsection (2) of this section
                                                                         average debt is taken to be the average value referred to in step 1 of the method statement in subsection (2) of this section

Subdivision 820‑C—Thin capitalisation rules for inward investing entities (non‑ADI)

Guide to Subdivision 820‑C

820‑180  What this Subdivision is about

      This Subdivision sets out the thin capitalisation rules that apply to a foreign entity or a foreign controlled Australian entity that is not an authorised deposit‑taking institution (an ADI). These rules deal with the following matters:
         • how to work out the entity's maximum allowable debt for an income year;
         • how all or a part of the debt deductions claimed by the entity may be disallowed if the maximum allowable debt is exceeded;
         • how to apply these rules to a period that is less than an income year.

Table of sections

Operative provisions

820‑185 Thin capitalisation rule for inward investing entities (non‑ADI)
820‑190 Maximum allowable debt
820‑195 Safe harbour debt amount—inward investment vehicle (general)
820‑200 Safe harbour debt amount—inward investment vehicle (financial)
820‑205 Safe harbour debt amount—inward investor (general)
820‑210 Safe harbour debt amount—inward investor (financial)
820‑215 Arm's length debt amount
820‑220 Amount of debt deduction disallowed
820‑225 Application to part year periods

[This is the end of the Guide.]

Operative provisions

820‑185  Thin capitalisation rule for inward investing entities (non‑ADI)

Thin capitalisation rule

 (1) This subsection disallows all or a part of each *debt deduction of an entity for an income year if:
 (a) the entity is an *inward investing entity (non‑ADI) for that year (see subsection (2)), but is not also an *outward investing entity (non‑ADI) (see section 820‑85) for all or any part of that year; and
 (b) for that year, the entity's *adjusted average debt (see subsection (3)) exceeds its *maximum allowable debt (see section 820‑190).

Note 1: This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $250,000 or less, see section 820‑35.

Note 2: To work out the amount to be disallowed, see section 820‑220.

Note 3: For the rules that apply to an entity that is an outward investing entity (non‑ADI) as well as an inward investing entity (non‑ADI), see Subdivision 820‑B.

Note 4: For the rules that apply to an entity that is an inward investing entity (non‑ADI) for only a part of an income year, see section 820‑225 in conjunction with subsection (2) of this section.

Note 5: To calculate an average value for the purposes of this Division, see Subdivision 820‑G.

Note 6: A resident TC group may be an inward investing entity (non‑ADI)