Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (No. 4) 1990 No. 4 of 1991 - SECT 19

19. Section 159GZW of the Principal Act is amended:

   (a)  by inserting after paragraph (a) the following paragraph:
  "(aa)   subsection (2) does not apply; and";


   (b)  by adding at the end the following subsections:

"(2) If:

   (a)  an amount of foreign debt interest is, apart from this Division,
        allowable as a deduction from the assessable income of a year of
        income of a taxpayer being a foreign investor; and

   (b)  the taxpayer makes an election, in accordance with subsection (5),
        that this subsection apply in relation to the taxpayer in relation to
        the year of income; the proportion of the foreign debt interest
        calculated under subsection (3) is not so allowable as a deduction.

"(3) The proportion is calculated using the formula:
    Average daily foreign        Foreign          No. of

    debt for excess              equity           excess

    foreign debt days            product          foreign

debt days
    --------------------------               x    ---------

    Average daily foreign debt                    Days in

year of
income where:
Average daily foreign debt for excess foreign debt days is the average of the
total foreign debt of the taxpayer in respect of each excess foreign debt day
of the taxpayer that occurred in the year of income;
Foreign equity product is the foreign equity product of the taxpayer of the
year of income;
Average daily foreign debt is the average of the total foreign debt of the
taxpayer in respect of each day that occurred in the year of income;
No. of excess foreign debt days is the number of excess foreign debt days of
the taxpayer that occurred in the year of income;
Days in year of income is the number of days in the year of income.

"(4) For the purposes of this section, if the total foreign debt of the
taxpayer in respect of a particular day exceeds the foreign equity product of
the taxpayer of the year of income, the day is an excess foreign debt day of
the taxpayer.

"(5) An election for the purposes of subsection (2) must be lodged with the
Commissioner on or before the date of lodgment of the taxpayer's return of
income for the later of the following years of income:

   (a)  the year of income to which the election relates;

   (b)  the year of income in which this subsection commenced; or within such
        further period as the Commissioner allows.".