Document ID: chunk:federal_register_of_legislation:C2024A00023:clause:2_76:p10
Version: federal_register_of_legislation:C2024A00023
Segment Type: clause
Provision Reference: sch 2 cl 76 (pt 10/12)
Character Range: 94296–97132

satisfies the conditions in subsection 820‑427C(1) in relation to the ultimate debt interest; or
 (ii) a debt interest issued by an entity that is an *Australian entity and that has made a choice under subsection 820‑46(4) to use the third party debt test for the income year; and
 (b) treat references in paragraphs 820‑427A(4)(a) and (b) to the entity as including the conduit financer mentioned in paragraph 820‑427C(1)(a) and each entity that issues a debt interest that satisfies the conditions in subsection 820‑427C(1) in relation to the ultimate debt interest.

Special rules for third party debt conditions—relevant debt interest
 (3) In applying subsection 820‑427A(3) in relation to the income year, in relation to the relevant debt interest, in addition to applying subsection (2) of this section:
 (a) treat the conditions in paragraphs 820‑427A(3)(a) and (b) as being satisfied; and
 (b) treat subsection 820‑427A(3) as also including the condition that the ultimate debt interest satisfies the *third party debt conditions (having regard to subsection (2) of this section) in relation to the income year.

820‑427C  Conduit financing conditions
 (1) If, in relation to an income year:
 (a) an entity (the conduit financer) issues a *debt interest (the ultimate debt interest) to an entity (the ultimate lender) that is not an *associate entity (see section 820‑427D) of the conduit financer; and
 (b) an entity (the borrower) that is an associate entity of the conduit financer issues another debt interest (the relevant debt interest) to:
 (i) the conduit financer; or
 (ii) another entity (the conduit borrower) that is an associate entity of the conduit financer and the borrower; and
 (c) the amount loaned under the relevant debt interest:
 (i) if subparagraph (b)(i) applies—was financed by the conduit financer only with proceeds from the ultimate debt interest; or
 (ii) if subparagraph (b)(ii) applies—was financed by the conduit borrower only with proceeds from another debt interest that is also a debt interest that satisfies the conditions in this subsection in relation to the ultimate debt interest because of a previous operation of this subsection; and
 (d) the terms of the relevant debt interest, to the extent that those terms relate to costs incurred by the borrower in relation to the relevant debt interest, are the same as the terms of the ultimate debt interest, to the extent that those terms relate to such costs incurred by the conduit financer in relation to the ultimate debt interest; and
 (e) the conduit financer, the borrower and each conduit borrower (if any) are *Australian entities (see section 820‑427E); and
 (f) it is not the case that subparagraph 820‑46(1)(b)(i) or (ii) applies (fixed ratio test or group ratio test applies) to the conduit financer, the borrower or any conduit