Broadly, 'foreign hybrid' means entities such as non-resident limited liability partnerships, limited liability companies in the United States of America and other similar entities that are taxed in Australia as a company but taxed on a partnership basis in their country of formation. The overseas jurisdiction taxes the members on their share of the entity's income and the entity itself is not taxed.
Under Division 830 of the Income Tax Assessment Act 1997 (ITAA 1997), and if certain conditions are met, non-resident limited partnerships and other foreign hybrids are treated as partnerships and not as companies for Australian income tax purposes. Investors in these entities are treated for Australian tax purposes as having partnership interests. There are special rules in addition to those normally applying to partnerships.