Commonwealth Consolidated Acts Commonwealth Consolidated ActsOutward investing financial entity (non - ADI) that is not also an inward investment vehicle (financial)
If the entity is an * outward investing financial entity (non - ADI) for that year, and not also an * inward investment vehicle (financial) for all or any part of that year, the worldwide gearing debt amount is the result of applying the method statement in this subsection.
Method statement
Step 1. Divide the average value of all the entity's * worldwide debt for the income year by the average value of all the entity's * worldwide equity for that year.
Step 3. Add 1 to the result of step 1.
Step 4. Divide the result of step 1 by the result of step 3.
Step 5. Multiply the result of step 4 in this method statement by the result of step 7 in the method statement in subsection 820 - 100(2).
Step 6. Add to the result of step 5 the average value, for that year, of the entity's * zero - capital amount (other than any zero - capital amount that is attributable to the entity's * overseas permanent establishments).
Step 7. Add to the result of step 6 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: GLM Limited, a company that is an Australian entity, has an average value of worldwide debt of $120 million and an average value of worldwide equity of $40 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 3 and 4) and multiplying the result by $121 million (which is the result of step 7 of the method statement in subsection 820 - 100(2)) equals $90.75 million. The average value of zero - capital amount (see step 7 of the method statement in subsection 820 - 100(2)) is $4 million. Adding that amount to $90.75 million results in $94.75 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $94.75 million.