Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 820.115

    The amount of * debt deduction disallowed under subsection   820 - 85(1) is worked out using the following formula:

where:

"average debt" means the sum of:

  (a)   the average value, for the income year, of the entity's * debt capital that is covered by step 1 of the method statement in subsection   820 - 85(3); and

  (b)   the average value, for that year, of the entity's * cost - free debt capital that is covered by step 5 of that method statement;

(disregarding any amount that is attributable to the entity's * overseas permanent establishments in working out the average values).

"debt deduction" means each * debt deduction covered by subsection   820 - 85(1).

"excess debt" means the amount by which the entity's * adjusted average debt for that year (see subsection   820 - 85(3)) exceeds its * maximum allowable debt for that year.

Note:   The disallowed amount also does not form part of the cost base of a CGT asset. See section   110 - 54.