188体育

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

Example - default allocation where a group includes DRICs

A group has 7 relevant group companies which, in a particular period of account of the worldwide group, have net financing deductions. Two of these companies are dual resident investing companies (DRICs). The net financing deductions are as follows:

Companies that are not DRICs	NFD (拢 million)	Companies that are DRICs	NFD (拢 million)
Alpha Ltd	82	Psi Ltd	100
Beta Ltd	3	Omega Ltd	12
Gamma Ltd	21	-	-
Delta Ltd	19	-	-
Epsilon Ltd	35	-	-
Total non-DRICs	160	-	-
-	-	Total DRICs	112

The tested expense amount (TEA), which is the aggregate of the net financing deductions across all relevant group companies, is therefore 拢272 million. The amount referred to as X in S284A, the aggregate net financing deduction for the DRICs, is 拢112 million.

The group does not submit a statement of allocated disallowances, and a 鈥渄efault allocation鈥� is made.

The following table shows how a disallowance would be allocated under S284 and S284A in two scenarios:

• if the total disallowed amount (TDA) is 拢60 million, and
• if the total disallowed amount is 拢180 million.

For a company that is not a DRIC, S284A (2) provides that the disallowance is calculated by applying the formula NFD/(TEA - X) x TDA.

Thus in the first scenario, the disallowance for each non-DRIC company will be:

NFD x 60/ (272 - 112), or NFD x 60/160

For a DRIC, S284A (3) provides the disallowance is NFD/X x (TDA - (TEA - X))

Inserting the figures for the first scenario (where the total disallowed amount is 拢60m) into this formula gives:

NFD/112 x (60 - (272 - 112))

Since this will always be negative, however, the disallowance for each DRIC is taken as nil.

In the second scenario, the disallowance for each non-DRIC would, under the S284A (2) formula, be:

NFD x 180/ (272 - 112)

This amount would, however, always be more than the company鈥檚 net financing deduction, so S284A (2) provides that the disallowance is limited to the company鈥檚 NFD.

The amount to be allocated to each DRIC under S284A (3) will be:

NFD x (180 - (272 - 112)/112, or NFD x 20/112

The overall result, in each scenario, will therefore be allocation of the full amount of the disallowance:

Company	NFD (拢 million)	Disallowed amount if TDA = 拢60 million (拢 million)	Disallowed amount if TDA = 拢180 million (拢 million)
Alpha	82	(82 x 60/160) 30.75	82
Beta	3	1.125	3
Gamma	21	7.875	21
Delta	19	7.125	19
Epsilon	35	13.125	35
Psi	100	Nil	(100 x 20/112) = 17.857
Omega	12	Nil	2.143
Totals	272	60	180