This depends on which school you are applying and what instrument your DC is playing.
For a most popular instrument like violin or piano the Grade require is usually higher compare to less popular instruments such as double bass and bassoon.
In some of the highly competitive indie some of their music scholars are at least Grade 6 distinction or above. I have heard of some even played Grade 8 piece for their audition.
But generally they expect at least Grade 5 distinction level for year 7 entry music audition. You should check on the school website as they usually stated the minimum standard that is require.