Australia/New Zealand

July 2025 Australia

This document provides additional insights and clarifications for the international dealings schedule.
This is not tax advice. The information provided herein is for informational purposes only and has been sourced from the following website: PLS form errors | Australian Taxation Office.

International dealings schedule - Section D - Thin Capitalisation - Entity type

Validations you may experience in this section
Validations
Description
CMN.ATO.IDS.440783
Thin capitalisation information required.
CMN.ATO.IDS.440793
Financial entity type code must not be provided.
CMN.ATO.IDS.440795
ADI fields must be provided.
CMN.ATO.IDS.440796
Non-ADI fields must be provided.
CMN.ATO.IDS.440803
Entity type code for the income year must be '2' or '3'.
CMN.ATO.IDS.440823
Thin capitalisation information required.
CMN.ATO.IDS.440825
Thin capitalisation, Investing financial entity - non-ADI and Outward investing financial entity information required.
CMN.ATO.IDS.440826
Thin capitalisation, General Information, all ADI entities, Outward investing ADI, and Inward investing ADI information required.
CMN.ATO.IDS.440827
Thin capitalisation, Australian plantation forestry entity, Financial entity, Outward investing entity information and a response to 'Did you rely on worldwide gearing debt or capital tests?' is required.
CMN.ATO.IDS.440832
Entity type code for the income year must be '4' or '5'.
CMN.ATO.IDS.440843
Debt deduction creation rules applicable to you must be completed.
CMN.ATO.IDS.440954
Financial entity type code and Average values calculation method code must not be completed.
CMN.ATO.IDS.440957
Adjusted average debt must not be completed.
CMN.ATO.IDS.440963
Adjusted average debt must be provided.
What You Must Provide Based on Your Entity Type Code
Entity Type Code 1
You must provide a response to the following questions:
  • Q35 Label A - Debt deductions
  • Q35 Label B - Debt deductions on debt from related non-residents
  • Q35 Label C - Amount of debt deduction disallowed
  • Q35 Label D - Adjusted average debt
  • Q35 Label E - Interest income and other amounts covered by paragraph 820-50(3)(b)
  • Q35 Label F - Interest income and other amounts covered by paragraph 820-50(3)(b) derived from related non-residents
  • Q35 Label E - Tax-EBITDA
  • Q35b Label A - Did you rely on the group ratio test?
  • Q35d Label A - Were you, or a member of your tax consolidated group, a special purpose entity subject to section 820-39 of the ITAA 1997?
  • Q35e Label A - Do you have a FRT disallowed amount from a prior income year?
Do not complete:
  • Q33 - Financial entity type code
  • Q34 - Average values calculation method code
Entity Type Code 2 or 3
If Q33 - 'Financial entity type code' is equal to 'a', 'b', 'c' or 'd', then a response must be provided to the following questions:
  • Q34 - Average values calculation method code
  • Q35 Label A - Debt deductions
  • Q35 Label B - Debt deductions on debt from related non-residents
  • Q35 Label C - Amount of debt deduction disallowed
  • Q35 Label D - Adjusted average debt
  • Q35 Label E - Interest income and other amounts covered by paragraph 820-50(3)(b)
  • Q35 Label F - Interest income and other amounts covered by paragraph 820-50(3)(b) derived from related non-residents
  • Q35 Label E - Tax-EBITDA
  • Q35b Label A - Did you rely on the group ratio test?
  • Q38 Label B - Investing financial entity - non-ADI - Average value of assets
  • Q35d Label A - Were you, or a member of your tax consolidated group, a special purpose entity subject to section 820-39 of the ITAA 1997?
  • Q39 - Did you rely on worldwide gearing debt or capital tests?
If you answered
FALSE
 to:
Q35d Label A - 'Were you, or a member of your tax consolidated group, a special purpose entity subject to section 820-39 of the ITAA 1997?' then Q52 Label A - 'Were the debt deduction creation rules applicable to you?' must be completed.
note
If 'Entity type code for the income year' is not equal to '2' or '3', then Q33 - 'Financial entity type code' must not be provided.
If You Relied on the Third-Party Debt Test (Entity Type 1, 2, or 3)
If your
entity type code for the income year
 is
'1', '2' or '3'
 and there is a
TRUE
 response to Q35c -
'Did you rely on the third-party debt test?'
, then a response is required at the following labels:
  • Q35c Label B - Third-party debt test choice made (Code)
  • Q35c Label C - Third-party earnings limit
  • Q35c Label D - Did the holder of a debt interest issued by you that satisfies the third-party debt conditions, have recourse to Australian assets that were rights that satisfy paragraph 820-427A(5)(a) and (b)?
  • Q35c Label E - Did the holder of a debt interest issued by you that satisfies the third-party debt conditions have recourse to Australian assets held by another member of the obligor group in relation to the debt interest?
  • Q35c Label F - Did the holder of a debt interest issued by you have recourse to assets that were membership interests in you that satisfy paragraph 820-427A(4)(b)?
  • Q35c Label G - Did the holder of a debt interest, that satisfies the third-party debt conditions, have recourse to minor or insignificant assets that were disregarded pursuant to paragraph 820-427A(3)(c)?
  • Q35c Label I - Did you have a conduit financing arrangement?
  • Q35c Label P - Were you a party to one or more cross-staple arrangements in effect during the income year?
  • Q35c Label Q - Were you a member of an obligor group in relation to a debt interest not issued by you?
Entity Type Code 4 or 5
You must provide a response to the following questions:
  • Q34 - Average values calculation method code
  • Q35 Label A - Debt deductions
  • Q35 Label B - Debt deductions on debt from related non-residents
  • Q35 Label C - Amount of debt deduction disallowed
  • Q35 Label E - Interest income and other amounts covered by paragraph 820-50(3)(b)
  • Q35 Label F - Interest income and other amounts covered by paragraph 820-50(3)(b) derived from related non-residents
  • Q35d Label A - Were you, or a member of your tax consolidated group, a special purpose entity subject to section 820-39 of the ITAA 1997?
  • All ADI entities - (adjusted) average equity capital
  • Q39 - Did you rely on worldwide gearing debt or capital tests?
Do NOT complete:
  • Q35 Label D - Adjusted average debt
If there is an amount greater than zero at
Q36 - 'All ADI entities - (Adjusted) average equity capital'
 then 'Entity type code for the income year' must be '4' or '5'.
If you relied on worldwide gearing debt or capital tests (TRUE), then labels under Q36 - 'ADI' must be provided.
Entity Type Code 6
You must provide responses for the following labels or questions:
  • Q34 - Average values calculation method code
  • Q35 Label A - Debt deductions
  • Q35 Label B - Debt deductions on debt from related non-residents
  • Q35 Label C - Amount of debt deduction disallowed
  • Q35 Label D - Adjusted average debt
  • Q35 Label E - Interest income and other amounts covered by paragraph 820-50(3)(b)
  • Q35 Label F - Interest income and other amounts covered by paragraph 820-50(3)(b) derived from related non-residents
  • If you were an Australian plantation forestry entity, provide the following info where applicable
  • Q39 - Did you rely on worldwide gearing debt or capital tests?
Other Important Rules
  • If 'Entity type code for the income year' is equal to '1', '2', '3' or '6', then Q35 Label D - 'Adjusted average debt' must be provided.
  • If 'Entity type code for the income year' is equal to '4' or '5', then Q35 Label D - 'Adjusted average debt' must not be completed.
  • If 'What was your entity type at the end of the income year?' code is present, the Q35 Label C - Amount of debt deduction disallowed is required.
  • If Q33 - 'Financial entity type code' is provided and there is an amount greater than zero at any of the following labels, then 'Entity type code for the income year' must be '2' or '3':
    • Q37 Label K Financial entity - Average zero capital amount
    • Q37 Label L Financial entity - Average on-lent amount
    • Q38 Label K Average zero capital amount
    • Q38 Label L Investing financial entity - non-ADI - Average on-lent amount
If You Relied on Worldwide Gearing Debt or Capital Tests
  • If 'Entity type code for the income year' is equal to '4' or '5' (ADI) and there is a TRUE response to Q39 - 'Did you rely on worldwide gearing debt or capital tests?', then labels under 'ADI' must be provided.
  • If 'Entity type code for the income year' is equal to '2' or '3' (non-ADI) and there is a TRUE response to Q39 - 'Did you rely on worldwide gearing debt or capital tests?', then labels under 'Non-ADI' must be provided.

Validation Alerts

The following highlights validation errors encountered by some users, with explanations to assist in troubleshooting and resolution.
Validation
Alert
Description
CMN.ATO.IDS.440757
Provide the information at ABN of the electing Australian company.(Q31)
If there is a TRUE response to Q31 Label A - 'Has an Australian resident company elected under Subdivision 820-FB of the ITAA 1997 to treat your qualifying Australian branch operations as part of a consolidated group, MEC group or a single company for thin capitalisation purposes? then provide the information at Q31 – Label B 'ABN of the electing Australian company' and no further information is required in Section D - Thin capitalisation of the schedule.
CMN.ATO.IDS.440863
The Debt deduction creation rules choice (Code) must be '3'.
If there is a TRUE response to Q30c Label A -'90% asset threshold' and a FALSE response to Q52 Label A - 'Were the debt deduction creation rules applicable to you?' then Q52 Label B - 'Debt deduction creation rules choice (Code)' must be '3'.
CMN.ATO.IDS.440865
The responses to the following are not required:
  • Did you rely on the $2 million threshold exemption?
  • 90% asset threshold
  • Certain special purpose entities
  • Australian resident entity that is neither an inward nor outward investing entity.
If there is a TRUE response to 'Were the thin capitalisation rules applicable to you?', then the following must not be completed:
  • Q30b Label A - Did you rely on the $2 million threshold exemption?
  • Q30c Label A - 90% asset threshold
  • Q30c Label B - Certain special purpose entities
  • Q30c Label B - Certain special purpose entities
CMN.ATO.IDS.440870
At least a TRUE response is required at either '90% asset threshold' or 'Certain special purpose entities', or 'You were an Australian resident entity that is neither an inward nor outward investing entity and it is exempted from the thin capitalisation rules.'
If there are FALSE responses to
  • Q30a Label A - 'Were the thin capitalisation rules applicable to you?'
And
  • Q30b Label A - 'Did you rely on the $2 million threshold exemption? '
then at least one TRUE response is expected for:
  • Q30c Label A - '90% asset threshold',
  • Q30c Label B - 'Certain special purpose entities' and
  • Q30c Label C - 'You were an Australian resident entity that is neither an inward nor outward investing entity and it is exempted from the thin capitalisation rules.'

This article applies to:

  • Product: ONESOURCE Corporate Tax