Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 815.140

  (1)   This section modifies the way an entity to which section   815 - 115 applies works out its taxable income, or its loss of a particular * sort, for an income year, if:

  (a)   Division   820 (about thin capitalisation) applies to the entity for the income year; and

  (aa)   the entity:

  (i)   is not a * general class investor in relation to the income year; and

  (ii)   has not made a choice under subsection   820 - 85(2C) or 820 - 185(2C) in relation to the income year; and

  (b)   the * arm's length conditions affect costs that are * debt deductions of the entity for the income year.

  (2)   If working out what those costs would be if the * arm's length conditions had operated involves applying a rate to a * debt interest:

  (a)   work out the rate as if the arm's length conditions had operated; but

  (b)   apply the rate to the debt interest the entity actually issued.

Note:   Division   820 may apply to reduce or further reduce debt deductions.