Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p4
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 4/11)
Character Range: 54173–56918

amount

 (3) The adjusted on‑lent amount is the result of applying the method statement in this subsection.

      Method statement
           Step 1. Work out the average value, for the income year, of all the assets of the entity.
           Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity equity of the entity.
           Step 3. Reduce the result of step 2 by the average value, for that year, of all the *non‑debt liabilities of the entity.
           Step 4. Reduce the result of step 3 by the amount (the average on‑lent amount) which is the average value, for that year, of the entity's *on‑lent amount. If the result of this step is a negative amount, it is taken to be nil.
           Step 5. Multiply the result of step 4 by 3/4.
           Step 6. Add to the result of step 5 the average on‑lent amount.
           Step 7. Reduce the result of step 6 by the average value, for that year, of all the *associate entity debt of the entity.
           Step 8. Add to the result of step 7 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the adjusted on‑lent amount.
Example: KJW Finance Pty Ltd, a company that is an Australian entity, has an average value of assets of $120 million.

 The average values of its associate entity equity, non‑debt liabilities and on‑lent amount are $3 million, $2 million and $35 million respectively. Deducting these amounts from the result of step 1 (through applying steps 2 to 4) leaves $80 million. Multiplying $80 million by 3/4 results in $60 million. Adding the average on‑lent amount of $35 million results in $95 million. Reducing $95 million by the associate entity debt amount of $5 million results in $90 million. As the company does not have any associate entity excess amount, the adjusted on‑lent amount is therefore $90 million.

820‑205  Safe harbour debt amount—inward investor (general)

  If the entity is an *inward investor (general) for the income year, the safe harbour debt amount is the result of applying the method statement in this section.

      Method statement
           Step 1. Work out the average value, for the income year, of all of the following assets of the entity (the Australian investments):

                (a) assets that are attributable to the entity's *Australian permanent establishments;
                (b) other assets that are held for the purposes of producing the entity's assessable income.

           Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity debt of the entity that has arisen because of the Australian investments.
           Step 3. Reduce the result of step 2