Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p9
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 9/11)
Character Range: 36450–39254

amount (other than any zero‑capital amount that is attributable to the entity's *overseas permanent establishments).
           Step 7. Add to the result of step 6 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the worldwide gearing debt amount.
Example: GLM Limited, a company that is an Australian entity, has an average value of worldwide debt of $120 million and an average value of worldwide equity of $40 million. The result of applying steps 1 and 2 is therefore 3.6. Dividing 3.6 by 4.6 (through applying steps 3 and 4) and multiplying the result by $126 million (which is the result of step 7 of the method statement in subsection 820‑100(2)) equals $98.61 million. The average value of zero‑capital amount (see step 7 of the method statement in subsection 820‑100(2)) is $4 million. Adding that amount to $98.61 million results in $102.61 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $102.61 million.

820‑115  Amount of debt deduction disallowed

  The amount of *debt deduction disallowed under subsection 820‑85(1) is worked out using the following formula:
where:

average debt means the average value, for the income year, of all the *debt capital of the entity that gives rise to *debt deductions of the entity for that or any other income year (other than any debt capital attributable to any of the entity's *overseas permanent establishments).

debt deduction means each *debt deduction covered by subsection 820‑85(1).

excess debt means the amount by which the entity's *adjusted average debt for that year (see subsection 820‑85(3)) exceeds its *maximum allowable debt for that year.

820‑120  Application to part year periods

 (1) This subsection disallows all or a part of each *debt deduction of an entity for an income year that is an amount incurred by the entity during a period that is a part of that year (to the extent that it is not attributable to an *overseas permanent establishment of the entity), if:
 (a) the entity is an *outward investing entity (non‑ADI) for that period; and
 (b) the entity's *adjusted average debt for that period exceeds the entity's *maximum allowable debt for that period.

Note: To determine whether an entity is an outward investing entity (non‑ADI) for that period, see subsection 820‑85(2).

 (2) The entity's adjusted average debt for that period is the result of applying the method statement in this subsection. In applying 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