Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-E - Reverse hybrid mismatch  

Operative provisions

SECTION 832-410   Reverse hybrid  

832-410(1)    
An entity (the test entity ) is a reverse hybrid in relation to a payment made to it if:

(a) subsection (2) applies to the entity in relation to a country and the payment; and

(b) subsection (3) applies to the entity in relation to a different country and the payment.

Note:

The entity, the payments it makes, and its income or profits are generally identified disregarding tax provisions: see section 832-30 .

Formation country - entity is transparent and payment is not within the tax base

832-410(2)    
This subsection applies to a test entity in relation to a country (the formation country ) and a payment made to the entity if:

(a) the test entity is formed in the formation country; and

(b) for the formation country, the test entity is:

(i) not a *liable entity; and

(ii) for Australia - not a *member of a *consolidated group or *MEC group; and

(c) for the formation country, another entity (an investor ) is a liable entity in respect of income or profits of the test entity.

Note:

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

Investor country - entity is not transparent

832-410(3)    
This subsection applies to a test entity in relation to a country (the investor country ) and a payment made to the entity if, in the investor country:

(a) an investor identified in paragraph (2)(c) is a *liable entity (an investing taxpayer ) in respect of its own income or profits, but not in respect of the test entity ' s income or profits; or

(b) an entity that is a liable entity (also an investing taxpayer ) in respect of the investor ' s income or profits is not also a liable entity in respect of the test entity ' s income or profits.