Section 220 Top-up amount of investment entity

The top-up amount for an accounting period of a member of a multinational group that is an investment entity is, subject to subsection (2), determined by taking the following steps—

• Step 1

  Determine the adjusted profits (if any) of the entity for the period in accordance with Chapter 4. If the adjusted profits are nil or less, the top-up amount is nil. Otherwise, proceed to Step 2.

• Step 2

  Adjust the result of Step 1 in accordance with section 223 (to the extent applicable). If the adjusted result is nil, the top-up amount is nil. Otherwise, proceed to Step 3.

• Step 3

  Determine the substance-based income exclusion for the entity for the period (see section 221).

• Step 4

  Adjust the result of Step 3 in accordance with section 223 (to the extent applicable).

• Step 5

  Subtract the result of Step 4 from the result of Step 2. If the result is nil or less, the top-up amount is nil. Otherwise, proceed to Step 6.

• Step 6

  Determine the investment entity effective tax rate for the territory for the period (see section 222).

• Step 7

  Subtract the result of Step 6 from 15%. If the result is nil or less, the top-up amount is nil. Otherwise, proceed to Step 8.

• Step 8

  Multiply the result of Step 7 by the result of Step 5. This is the top-up amount for the entity F1, unless the entity has a positive undistributed income amount (see sections 214 and 215) for the period (in which case proceed to Step 9).

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For the purposes of applying Chapter 4 in relation to an investment entity, the references in F4that Chapter to “standard members” of a multinational group are instead to members of the multinational group that are investment entities.