Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p10
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 10/11)
Character Range: 38986–41651

the method statement, disregard any amount that is attributable to the entity's *overseas permanent establishments.

      Method statement
           Step 1. Work out the average value, for that period, of all the *debt capital of the entity that gives rise to *debt deductions of the entity for that or any other income year.
           Step 2. Reduce the result of step 1 by the average value, for that period, of all the *associate entity debt of the entity (other than any *controlled foreign entity debt of the entity).
           Step 3. Reduce the result of step 2 by the average value, for that period, of all the *controlled foreign entity debt of the entity.
           Step 4. If the entity is a *financial entity throughout that period, add to the result of step 3 the average value, for that period, of the entity's *zero‑capital amount, to the extent that:

                (a) the zero‑capital amount is attributable to the securities loan arrangements mentioned in step 1 of the method statement in subsection 820‑942(1); and
                (b) the securities loan arrangements are not *debt interests.

           Step 5. Add to the result of step 4 the average value, for that period (the relevant period), of any *debt capital of the entity that does not give rise to any *debt deductions of the entity for that or any other income year, if:

                (a) the debt capital is comprised of *debt interests issued to another entity that remain *on issue; and
                (b) that other entity is an *outward investing entity (non‑ADI) or *inward investing entity (non‑ADI) for a period that is, or includes, all or a part of the relevant period; and
                (c) for the purposes of the application of this Division to the entities, and in relation to only that part of the period that falls within the relevant period, the entities do not use the same *valuation days and the same number of valuation days to calculate the average value of their respective debt capital.

            The result of this step is the adjusted average debt.

 (3) The entity's *adjusted average debt does not exceed its *maximum allowable debt if the adjusted average debt is nil or a negative amount.

 (4) For the purposes of determining:
 (a) the *maximum allowable debt for the period mentioned in subsection (1); and
 (b) the amount of each *debt deduction to be disallowed;
sections 820‑90 to 820‑115 apply in relation to that entity and that period with the modifications set out in the following table:

Modifications of sections 820‑90 to 820‑115
Item                                         Provisions                  Modifications