Section 176G Clawback of earlier qualifying flow-through tax benefitsF1

This section applies to an investor in a tax equity partnership arrangement if—

For the purpose of determining the investor’s covered tax balance for the later period, the investor’s qualifying current tax expense for that period is to be adjusted (after the steps in section 174(1) have been taken) by subtracting the clawback amount.

“The clawback amount” is determined as follows—

• Step 1

  Determine the total amount of the qualifying flow-through tax benefits provided to the investor under the arrangement in accounting periods before the later period.

• Step 2

  Subtract from the result of Step 1 the total of any amounts subtracted under subsection (2) from the investor’s qualifying current tax expense for accounting periods before the later period.

• Step 3

  Compare the result of Step 2 with the amount of the investor’s excess return from the arrangement in the later period.

  Whichever is less is the clawback amount.

For the purposes of this section an investor has an “excess return” from an arrangement in an accounting period (“the current period”) if the total relevant return exceeds the amount of capital investment provided by the investor to the arrangement at its commencement.

The amount of the excess return is the amount of the excess.

In subsection (4) “the total relevant return” means the sum of—

less the amount of any excess return that the investor had from the arrangement in any earlier accounting period.