Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p2
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 2/6)
Character Range: 76158–79194

an income year if, and only if, throughout that period, the entity is an *ADI to which at least one of the following paragraphs applies:
 (a) the entity is an *Australian controller of at least one *Australian controlled foreign entity (not necessarily the same Australian controlled foreign entity throughout that period);
 (b) the entity is an *Australian entity that carries on a *business at or through at least one *overseas permanent establishment (not necessarily the same permanent establishment throughout that period);
 (c) the entity is:
 (i) an Australian entity; and
 (ii) an *associate entity of another entity that is an *outward investing entity (non‑ADI) or an *outward investing entity (ADI) for that period.

Note: To determine whether an entity is an Australian controller of an Australian controlled foreign entity, see Subdivision 820‑H.

Adjusted average equity capital

 (3) The entity's adjusted average equity capital for an income year is:
 (a) the average value, for that year, of all the *equity capital of the entity (other than equity capital attributable to its *overseas permanent establishments); minus
 (b) the average value, for that year, of all the *controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to its overseas permanent establishments).

Note: To calculate an average value for the purposes of this Division, see Subdivision 820‑G.

820‑305  Minimum capital amount

  The entity's minimum capital amount for an income year is the least of the following amounts:
 (a) the *safe harbour capital amount;
 (b) the *arm's length capital amount;
 (c) the *worldwide capital amount.

Note: The entity cannot use the worldwide capital amount if the entity is also a foreign controlled Australian entity throughout that year, see section 820‑320.

820‑310  Safe harbour capital amount

  The safe harbour capital 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 the *risk‑weighted assets of the entity, other than risk‑weighted assets attributable to any of the following:

                (a) the entity's *overseas permanent establishments;
                (b) assets comprised by the *controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to the entity's overseas permanent establishments);
                (c) assets for which *prudential capital deductions must be made by the entity (other than prudential capital deductions attributable to the entity's overseas permanent establishments).

           Step 2. Multiply the result of step 1 by 4%.
           Step 3. Add to the result of step 2 the average value, for that year, of all the *tier 1 prudential capital deductions for the entity (to the extent that they are not attributable to any of the entity's *overseas permanent establishments or any *Australian controlled foreign entities of which the entity