Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 1/2)
Character Range: 7078328–7081327

4                                                                            Subsections 351(2) to (4)  The subsections do not apply

Modification of TC direct control interest—partnerships
 (6) For the purposes of this section, in working out whether the controlling entity holds a *TC direct control interest in a partnership, apply section 820‑865 as if:
 (a) the reference to "greatest" were a reference to "least"; and
 (b) paragraph 820‑865(b) were omitted.

Modified meaning of Australian entity
 (7) For the purposes of this section, in determining whether an entity is an *Australian entity (including for the purposes of determining whether another entity is a *foreign entity) at a particular time:
 (a) for the purposes of paragraph 336(a) of the Income Tax Assessment Act 1936, treat a partnership as being an Australian entity if, at that time, a *direct participation interest of 50% or more is held in the partnership by one or more of the following:
 (i) an Australian resident;
 (ii) an *Australian trust; and
 (b) disregard section 337 of that Act.

Subdivision 820‑B—Thin capitalisation rules for outward investing financial entities (non‑ADI)

Guide to Subdivision 820‑B

820‑65  What this Subdivision is about

      This Subdivision sets out the thin capitalisation rules that apply to an entity that is an outward investing financial entity (non‑ADI) for all of an income year. 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
820‑85 Thin capitalisation rule for outward investing financial entities (non‑ADI)
820‑90 Maximum allowable debt
820‑100 Safe harbour debt amount—outward investing financial entity (non‑ADI)
820‑110 Worldwide gearing debt amount—outward investor that is not also an inward investment vehicle
820‑111 Worldwide gearing debt amount—outward investor that is also an inward investment vehicle
820‑115 Amount of debt deduction disallowed
820‑120 Application to part year periods

Operative provisions

820‑85  Thin capitalisation rule for outward investing financial entities (non‑ADI)

Thin capitalisation rule
 (1A) Subsection (1) applies if:
 (a) an entity is an *outward investing financial entity (non‑ADI) (see subsection (2)) for all of an income year; and
 (b) either:
 (i) the entity has made a choice under subsection (2C) in relation to the income year; or
 (ii) otherwise—the entity's *adjusted average debt (see subsection (3)) for the income year exceeds its *maximum allowable debt (see section 820‑90) for the income year.
Note: This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $2 million or less, see section 820‑35.
 (1)