Document ID: chunk:federal_register_of_legislation:C2004A00897:clause:1_4:p6
Version: federal_register_of_legislation:C2004A00897
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 6/11)
Character Range: 59222–61996

the result of step 2 by the average value, for that year, of all the *associate entity equity of the entity that has arisen because of the Australian investments.
           Step 4. Reduce the result of step 3 by the average value, for that year, of all the *non‑debt liabilities of the entity that have arisen because of the Australian investments.
           Step 5. Reduce the result of step 4 by the average value, for that year, of the entity's *zero‑capital amount that has arisen because of the Australian investments. If the result of this step is a negative amount, it is taken to be nil.
           Step 6. Multiply the result of step 5 by 20/21.
           Step 7. Add to the result of step 6 the average value, for that year, of the entity's *zero‑capital amount that has arisen because of the Australian investments.
           Step 8. Add to the result of step 7 the average value, for that year, of the entity's *associate entity excess amount. The result of this step is the total debt amount.
Example: FXS Financial SA is a company that is not an Australian entity. The average value of its Australian investments is $120 million.

 The average value of its relevant associate entity debt, associate entity equity, non‑debt liabilities and zero‑capital amount are $5 million, $2 million, $3 million and $5 million respectively. Deducting those amounts from the result of step 1 (through applying steps 2 to 5) leaves $105 million. Multiplying $105 million by 20/21 results in $100 million. Adding the average zero‑capital amount of $5 million results in $105 million. As the company does not have any associate entity excess amount, the total debt amount is therefore $105 million.

Adjusted on‑lent amount

 (3) The adjusted on‑lent amount is the result of applying the method statement in this subsection.

      Method statement
           Step 1. Work out the average value, for the income year, of all of the following assets of the entity (the Australian investments):

                (a) assets that are attributable to the entity's *Australian permanent establishments;
                (b) other assets that are held for the purposes of producing the entity's assessable income.

           Step 2. Reduce the result of step 1 by the average value, for that year, of all the *associate entity equity of the entity that has arisen because of the Australian investments.
           Step 3. Reduce the result of step 2 by the average value, for that year, of all the *non‑debt liabilities of the entity that has arisen because of the Australian investments.
           Step 4. Reduce the result of step 3 by the amount (the average on‑lent amount) which is the average value, for that year, of the *on‑lent amount of the entity (to the extent that