TAX LAWS AMENDMENT (2010 MEASURES NO. 3) ACT 2010 (NO. 90, 2010) - SCHEDULE 2 Thin capitalisation
TAX LAWS AMENDMENT (2010 MEASURES NO. 3) ACT 2010 (NO. 90, 2010) - SCHEDULE 2
Thin capitalisation
Income Tax Assessment Act 1997
1 At the end of section 820‑300
Add:
(4) For the purposes of paragraph (3)(a), treat treasury shares (within the meaning of * accounting standard AASB 132) in the entity as included in the * ADI equity capital of the entity, to the extent that those shares are part of the entity's eligible tier 1 capital (within the meaning of the * prudential standards).
2 Section 820‑310
Before "The safe harbour capital amount is", insert "(1)".
3 Section 820‑310 (method statement, step 1)
Omit all the words before paragraph (a), substitute:
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:
4 Section 820‑310 (method statement, step 3)
Repeal the step, substitute:
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 .
5 Section 820‑310 (example)
Omit "risk‑weighted assets is $150 million (having discounted those risk‑weighted assets", substitute "risk‑weighted assets and intangible assets comprising capitalised software expenses is $150 million (having discounted those assets".
6 At the end of section 820‑310
Add:
(2) VBIF is the value of business in force at the time of acquisition of the relevant subsidiary (within the meaning of paragraph 5.3 of * accounting standard AASB 1038, as issued on 17 November 1998) of the entity.
(3) * VBIF is taken to be nil at all times unless the value of VBIF at the time of acquisition of the relevant subsidiary was worked out by an * actuary according to Australian actuarial practice.
7 Subsection 820‑680(1) (note)
After "sections", insert "820‑310,".
8 Subsection 995‑1(1)
Insert:
"VBIF" (short for value of business in force) has the meaning given by section 820-310.
9 Application provision
The amendments made by this Schedule apply to assessments for each income year starting on or after 1 January 2009.