Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This subsection disallows all or a part of each * debt deduction of an entity for an income year that is an amount incurred by the entity during a period that is a part of that year (to the extent that it is not attributable to an * overseas permanent establishment of the entity) if, for that period:
(a) the entity is an * outward investing entity (ADI); and
(b) the * adjusted average equity capital of the entity is less than the entity's * minimum capital amount.
Note: To determine whether an entity is an outward investing entity (ADI) for that period, see subsection 820 - 300(2).
(2) The entity's adjusted average equity capital for that period is:
(a) the average value, for that period, of all the * ADI equity capital of the entity (other than ADI equity capital attributable to any of its * overseas permanent establishments); minus
(b) the average value, for that period, of all the * controlled foreign entity equity of the entity (other than controlled foreign entity equity attributable to any of its overseas permanent establishments).
(3) For the purposes of determining:
(a) the entity's * minimum capital amount for that period; and
(b) the amount of each * debt deduction to be disallowed;
sections 820 - 305 to 820 - 325 apply in relation to that entity and that period with the modifications set out in the following table:
Item | Provisions | Modifications |
1 | A reference to an income year is taken to be a reference to that period | |
2 | Section 820 - 325 | A reference to subsection 820 - 300(1) is taken to be a reference to subsection (1) of this section |
3 | Section 820 - 325 | adjusted average equity capital has the meaning given by subsection (2) of this section average debt is taken to be the average value, for that period, of all the * debt capital of the entity that gives rise to * debt deductions of the entity for that or any other income year, to the extent that the debt capital is not attributable to any of the entity's * overseas permanent establishments |