Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p6
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 6/25)
Character Range: 7326823–7329711

required credit rating?
 (4) For the purposes of step 2 of the method statement in subsection (1), the required credit rating for an entity issuing a *debt interest is:
 (a) if the interest is a *subordinated debt interest—a long‑term foreign currency corporate credit rating of at least A (or equivalent) given to the entity by an internationally recognised rating agency; or
 (b) if the interest is a not a subordinated debt interest—a long‑term foreign currency corporate credit rating of at least BBB (or equivalent) given to the entity by an internationally recognised rating agency.

When must an entity have the required credit rating
 (5) The entity must have the required credit rating as specified in any of the following paragraphs:
 (a) the entity had the required credit rating for the *debt interest when the interest was issued;
 (b) the following subparagraphs apply:
 (i) the entity did not have any long‑term foreign currency corporate credit rating given to it by an internationally recognised rating agency when the debt interest was issued; but
 (ii) the entity had the required credit rating for that interest at any time during the period of 6 months immediately before the interest was issued;
 (c) the following subparagraphs apply:
 (i) when the debt interest was issued, and throughout the period of 6 months immediately before the interest was issued, the entity did not have any long‑term foreign currency corporate credit rating given to it by an internationally recognised rating agency; but
 (ii) the entity has the required credit rating for that interest at any time during the period of 6 months immediately after the interest was issued.

Subdivision 820‑KA—Cost‑free debt capital and excluded equity interests

Guide to Subdivision 820‑KA

820‑945  What this Subdivision is about
      This Subdivision sets out the meaning of cost‑free debt capital, and excluded equity interest, for the purposes of this Division.

Table of sections
820‑946 Cost‑free debt capital and excluded equity interest

820‑946  Cost‑free debt capital and excluded equity interest
 (1) This subsection applies to an entity for a period (the relevant period) that is all or a part of an income year if the entity satisfies all of the following:
 (a) the entity is an *outward investing financial entity (non‑ADI) or *inward investing financial entity (non‑ADI) for that period;
 (b) if the entity is a *foreign entity—the entity holds any of the following assets throughout that period:
 (i) assets that are attributable to the entity's *Australian permanent establishments;
 (ii) other assets that are held for the purposes of producing the entity's assessable income;
 (c) neither section 820‑35 ($2 million debt deductions threshold) nor section 820‑37 (exemption for entity with 90% Australian assets) prevents Subdivision 820‑B, 820‑C, 820‑D or 820‑E from disallowing any