Method statement

Step 1.   Work out the average value, for the income year, of all the entity's:

  (aa)   * risk - weighted assets; and

  (ab)   intangible assets comprising capitalised software expenses;

  that are attributable to none of the following:

  (a)   the entity's * overseas permanent establishments;

  (b)   assets comprised by the * controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to the entity's overseas permanent establishments);

  (c)   assets for which * prudential capital deductions must be made by the entity (other than prudential capital deductions attributable to the entity's overseas permanent establishments).

Step 2.   Multiply the result of step 1 by 6%.

Step 3.   Add to the result of step 2 the average value, for that year, of all the * tier 1 prudential capital deductions for the entity, to the extent that they are not attributable to:

  (a)   any of the entity's * overseas permanent establishments; or

  (b)   any * Australian controlled foreign entities of which the entity is an * Australian controller; or

  (c)   any of the entity's goodwill or intangible assets which relate to the excess mentioned in paragraph   5.3 of * accounting standard AASB 1038, as issued on 17   November 1998, to the extent that the excess is referrable to * VBIF; or

  Note:   Paragraph   5.3 of that accounting standard applies to any excess of the net market values of an interest in a subsidiary over the net amount of that subsidiary's assets and liabilities.

  (d)   any of the entity's intangible assets comprising capitalised software expenses.

  The result of this step is the safe harbour capital amount .