Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p5
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 5/6)
Character Range: 7307555–7310143

permanent establishments if it is an *outward investing financial entity (non‑ADI) at that time.

      Method statement
           Step 1. Work out the *safe harbour debt amount of the *associate entity for the day during which that particular time occurs, as if the associate entity were an *outward investing financial entity (non‑ADI) or *inward investing financial entity (non‑ADI), as appropriate, for the period consisting only of that day.
           Step 2. Reduce the result of step 1 by the value of the *adjusted average debt of the *associate entity for that day as if it had been the kind of entity that it is taken to be under step 1 for that day. If the result of this step is a negative amount, it is taken to be nil.
           Step 3. Multiply the result of step 2 by the sum of:

                (a) the value, as at that time, of all the *equity capital of the *associate entity that is attributable to the relevant entity at that time; and
                (b) the value, as at that time, of all the *debt interests *issued by the associate entity that are covered by subsection (5), and held by the relevant entity, at that time; and
                (c) the value, as at that time, of all the debt interests issued by the associate entity that are covered by subsection (6), and held by the relevant entity, at that time.

           Step 4. Divide the result of step 3 by the sum of:

                (a) the value, as at that time, of all the *equity capital of the *associate entity; and
                (b) the value, as at that time, of all the *debt interests *issued by the associate entity that are covered by subsection (5) at that time; and
                (c) the value, as at that time, of all the debt interests issued by the associate entity that are covered by subsection (6) at that time.
 (5) For the purposes of the method statement in subsection (4), this subsection covers a *debt interest at a particular time if the interest satisfies all of the following:
 (a) the interest is *on issue at that time;
 (b) neither the value of the interest, nor any part of that value, is all or a part of any *cost‑free debt capital of the issuer of the interest at that time;
 (c) the interest does not give rise to any cost, at any time, that is covered by paragraph 820‑40(1)(a).
 (6) For the purposes of the method statement in subsection (4), this subsection covers a *debt interest at a particular time if the interest satisfies both of the following:
 (a) the interest is *on issue at that time;
 (b) the interest gives rise to a cost, at any time,