Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p7
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 7/13)
Character Range: 7178627–7181491

of the Income Tax Assessment Act 1936; or
 (b) sufficiently influences another entity for the purposes of that section.
 (6) If:
 (a) there is any breach by any entity of the terms of a *debt interest issued by, or held by, the trust; and
 (b) there are reasonable grounds to believe that the breach occurred only to protect the interests of secured creditors in relation to the debt interest;
sufficient influence is not taken to exist in relation to the trust merely because of the breach.

820‑423F  Modified meaning of Australian entity
  For the purposes of this Subdivision, in determining whether an entity is an *Australian entity (including for the purposes of determining whether another entity is a *foreign entity) at a particular time:
 (a) for the purposes of paragraph 336(a) of the Income Tax Assessment Act 1936, treat a partnership as being an Australian entity if, at that time, a *direct participation interest of 50% or more is held in the partnership by one or more of the following:
 (i) an Australian resident;
 (ii) an *Australian trust; and
 (b) disregard section 337 of that Act.

Subdivision 820‑EAB—Third party debt concepts

Guide to Subdivision 820‑EAB

820‑427  What this Subdivision is about

      This Subdivision sets out concepts concerning third party debt. These concepts are relevant to entities that choose to apply the third party debt test, that is:
             (a) general class investors that make a choice, or that are taken to have made a choice, under subsection 820‑46(4); and
             (b) outward investing financial entities (non‑ADI) that make a choice under subsection 820‑85(2C); and
             (c) inward investing financial entities (non‑ADI) that make a choice under subsection 820‑185(2C).

Table of sections

Operative provisions
820‑427A Meaning of third party earnings limit and third party debt conditions
820‑427B Consequences of conduit financing conditions being met
820‑427C Conduit financing conditions
820‑427D Modified meaning of associate entity

Operative provisions

820‑427A  Meaning of third party earnings limit and third party debt conditions
 (1) An entity's third party earnings limit for an income year is the sum of each *debt deduction of the entity for the income year (disregarding this Division) that is attributable to a *debt interest issued by the entity that satisfies the *third party debt conditions in relation to the income year.
 (2) For the purposes of subsection (1), treat a *debt deduction of an entity as being attributable to a *debt interest issued by the entity to the extent that:
 (a) the debt deduction is directly associated with hedging or managing the interest rate risk in respect of the debt interest; and
 (b) the debt deduction is not referable to an amount paid or payable, directly or indirectly, to an *associate entity (see section 820‑427D)