Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-F - Branch hybrid mismatch  

Operative provisions

SECTION 832-480   Hybrid requirement - payment made directly or indirectly to a branch hybrid  

832-480(1)    
The payment meets the hybrid requirement in this section if:

(a) the payment is made directly, or indirectly through one or more interposed entities, to a *branch hybrid; and

(b) subsection (2) or (3) applies.

Payment would have been taxed in Australia

832-480(2)    
This subsection applies if:

(a) the residence country identified in subsection 832-485(2) is Australia; and

(b) either:

(i) the amount of the *deduction/non-inclusion mismatch exceeds the amount that would be the amount of that mismatch if the amount of the payment that was *subject to Australian income tax for an income year was instead worked out on the assumption in subsection (4); or

(ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch or a *hybrid payer mismatch.

Payment would have been taxed in a foreign country

832-480(3)    
This subsection applies if:

(a) the residence country identified in subsection 832-485(2) is a foreign country; and

(b) either:

(i) the amount of the *deduction/non-inclusion mismatch exceeds the amount that would be the amount of that mismatch if the amount of the payment that was *subject to foreign income tax for a *foreign tax period was instead worked out on the assumption in subsection (4); or

(ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch or a *hybrid payer mismatch.

Assumption - residence country treated payment as non-branch income

832-480(4)    
For the purposes of subsections (2) and (3), assume that the payment was instead treated as income derived by the *liable entity but not in carrying on a business at or through a *PE in another country for the purposes of:

(a) if the residence country is Australia - this Act; or

(b) if the residence country is a foreign country - the law of the residence country relating to *foreign income tax (except a tax covered by subsection 832-130(7) ).