Document ID: chunk:federal_register_of_legislation:C2014A00110:clause:1_20:p3
Version: federal_register_of_legislation:C2014A00110
Segment Type: clause
Provision Reference: sch 1 cl 20 (pt 3/3)
Character Range: 27584–29150

method statement in this section.

      Method statement
           Step 1. Divide the entity's *statement worldwide debt for the income year by the entity's *statement worldwide equity for that year.
           Step 2. Add 1 to the result of step 1.
           Step 3. Divide the result of step 1 by the result of step 2.
           Step 4. Multiply the result of step 3 in this method statement by the result of step 5 in the method statement in subsection 820‑210(2).
           Step 5. Add to the result of step 4 the average value, for that year, of the entity's *zero‑capital amount that has arisen because of the Australian investments mentioned in step 1 of the method statement in subsection 820‑210(2).
           Step 6. Add to the result of step 5 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: MSR Limited, a company that is not an Australian entity, has investments in Australia. MSR Limited has statement worldwide debt of $90 million and statement worldwide equity of $30 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 2 and 3) and multiplying the result by $100 million (which is the result of step 5 of the method statement in subsection 820‑210(2)) equals $75 million. The zero‑capital amount is $5 million. Adding that amount to $75 million results in $80 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $80 million.