Document ID: chunk:federal_register_of_legislation:C2024A00023:clause:2_57
Version: federal_register_of_legislation:C2024A00023
Segment Type: clause
Provision Reference: sch 2 cl 57
Character Range: 64634–67068

57  Subsections 820‑185(1) and (2)
Repeal the subsections, substitute:

Thin capitalisation rule
 (1A) Subsection (1) applies if:
 (a) an entity is an *inward investing financial entity (non‑ADI) (see subsection (2)) for all of an income year, but is not also an *outward investing financial entity (non‑ADI) (see section 820‑85) for all or any part of that year; and
 (b) either:
 (i) the entity has made a choice under subsection (2C) in relation to the income year; or
 (ii) otherwise—the entity's *adjusted average debt (see subsection (3)) for the income year exceeds its *maximum allowable debt (see section 820‑190) for the income year.
Note: This Subdivision does not apply if the total debt deductions of that entity and all its associate entities for that year are $2 million or less, see section 820‑35.
 (1) This subsection disallows:
 (a) if paragraph (1A)(b)(i) applies—all or part of the entity's *debt deductions for the income year; or
 (b) if paragraph (1A)(b)(ii) applies—all or a part of each debt deduction of the entity for the income year.
Note 1: To work out the amount to be disallowed, see section 820‑220.
Note 2: For the rules that apply to an entity that is an outward investing financial entity (non‑ADI) as well as an inward investing financial entity (non‑ADI), see Subdivision 820‑B.
Note 3: For the rules that apply to an entity that is an inward investing financial entity (non‑ADI) for only a part of an income year, see section 820‑225 in conjunction with subsection (2) of this section.
Note 4: To calculate an average value for the purposes of this Division, see Subdivision 820‑G.
Note 5: A consolidated group or MEC group may be an inward investing financial entity (non‑ADI) to which this Subdivision applies: see Subdivisions 820‑FA and 820‑FB.

Inward investing financial entity (non‑ADI)
 (2) The entity is an inward investing financial entity (non‑ADI) for a period that is all or a part of an income year if, and only if, it is:
 (b) an *inward investment vehicle (financial) for that period (as set out in item 1 of the following table); or
 (d) an *inward investor (financial) for that period (as set out in item 2 of that table).

Inward investing financial entity (non‑ADI)
Item                                         If the entity is a:                                                                                and the entity:                                the entity is an: