Document ID: chunk:federal_register_of_legislation:C2025C00029:section:9:p4
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 9 (pt 4/19)
Character Range: 7037978–7040627

entity is one of 2 or more entities that together satisfy the condition that, assuming:
 (a) each of the entities had been a division or part of the same entity (the notional entity), rather than a separate entity, throughout that period; and
 (b) the notional entity had consisted only of those divisions and parts throughout that period;
the notional entity would meet the conditions in subsection (3) throughout that period.

820‑40  Meaning of debt deduction
 (1) Debt deduction, of an entity and for an income year, is a cost incurred by the entity to the extent to which:
 (a) the cost is:
 (i) interest, an amount in the nature of interest, or any other amount that is economically equivalent to interest; or
 (ii) the difference between the *financial benefits received, or to be received, by the entity under a *scheme giving rise to a *debt interest and the financial benefits provided, or to be provided, under that scheme; or
 (iii) any amount directly incurred in obtaining or maintaining the financial benefits received, or to be received, by the entity under a scheme giving rise to a debt interest; or
 (iv) any other expense incurred by the entity that is specified in the regulations made for the purposes of this subparagraph; and
 (b) the entity can, apart from this Division, deduct the cost from its assessable income for that year;
 (2) A cost covered by paragraph (1)(a) includes, but is not limited to, any of the following:
 (a) an amount in substitution for interest;
 (b) a discount in respect of a security;
 (c) a fee or charge in respect of a debt, including application fees, line fees, service fees, brokerage and stamp duty in respect of document registration or security for a *debt interest;
 (d) an amount that is taken under an *income tax law to be an amount of interest in respect of a lease, a hire purchase arrangement or any other *arrangement specified in that law;
 (e) any loss in respect of:
 (i) a reciprocal purchase agreement (otherwise known as a repurchase agreement);
 (ii) a sell‑buyback arrangement;
 (iii) a securities loan arrangement;
 (f) any amount covered by paragraph (1)(a) that has been assigned or is dealt with in any way on behalf of the party who would otherwise be entitled to that amount.
 (3) To avoid doubt, the following amounts that are incurred by an entity in relation to a *debt interest issued by the entity are not covered by paragraph (1)(a):
 (b) losses incurred by the entity in relation to which the following apply:
 (i) the losses would otherwise be a cost covered by subparagraph (1)(a)(ii); but
 (ii) the benefits mentioned in that subparagraph are measured in a