Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-G - Deducting hybrid mismatch  

Operative provisions

SECTION 832-555   Identifying a secondary response country  

832-555(1)    
This section applies if an amount gives rise to a *deducting hybrid mismatch, other than a deducting hybrid mismatch covered by subsection (2).

Dual residents - no secondary response

832-555(2)    
This subsection covers a *deducting hybrid mismatch if:

(a) the only *liable entity in respect of income or profits of the *deducting hybrid is the deducting hybrid; and

(b) the liable entity satisfies the residency test in subsection (9) in both deducting countries.

Note 1:

For the meaning of liable entity , see section 832-325 .

Note 2:

If the deducting hybrid is a dual resident, the mismatch may be neutralised by any country.

Country is a primary response country unless this section provides otherwise

832-555(3)    
A country in which the amount gives rise to a deduction or *foreign income tax deduction (a deducting country ) is a primary response country in relation to the *deducting hybrid mismatch unless the country is identified as the secondary response country under subsection (4), (5), (6), (7) or (8).

Both countries recognise the same liable entity - residence country is secondary response

832-555(4)    
If:

(a) the *deducting hybrid is itself the *liable entity in each deducting country; and

(b) in one deducting country, the deducting hybrid does not satisfy the residency test in subsection (9); and

(c) in the other deducting country, the deducting hybrid does satisfy the residency test;

then the country mentioned in paragraph (b) is the secondary response country.

832-555(5)    
If:

(a) in both deducting countries, the same entity is the *liable entity in respect of the income or profits of the *deducting hybrid; and

(b) in one deducting country, the liable entity does not satisfy the residency test in subsection (9); and

(c) in the other deducting country, the liable entity does satisfy the residency test;

then the country mentioned in paragraph (b) is the secondary response country.

Countries recognise different liable entities - non-parent country is secondary response

832-555(6)    
If:

(a) the *liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

(b) in one deducting country, the *deducting hybrid is the liable entity;

then the country mentioned in paragraph (b) is the secondary response country.

832-555(7)    
If:

(a) the *liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

(b) the *deducting hybrid is not the liable entity in either country; and

(c) in one deducting country, the entity that is a liable entity is also a liable entity in respect of the income or profits of the entity that is the liable entity in the other deducting country;

then the country mentioned second in paragraph (c) is the secondary response country.

832-555(8)    
If:

(a) the *liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

(b) subsections (6) and (7) do not apply; and

(c) in one deducting country, the deducting hybrid and the liable entity both satisfy the residency test in subsection (9);

then the country mentioned in paragraph (c) is the secondary response country.

Residency test

832-555(9)    
An entity satisfies the residency test in this subsection in relation to a country, if:

(a) if the country is Australia - the entity is an *Australian entity; or

(b) if the country is a foreign country:

(i) the entity is a resident of the foreign country for the purposes of the law of the foreign country relating to *foreign income tax (except a tax covered by subsection 832-130(7) ); or

(ii) the tax base of the entity, as it relates to foreign income tax (except a tax covered by subsection 832-130(7) ), includes income from worldwide sources.