Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-C - Hybrid financial instrument mismatch  

Operative provisions

SECTION 832-220   Hybrid requirement - payments under financial instruments  

832-220(1)    
A *deduction/non-inclusion mismatch, or a part of such a mismatch, meets the hybrid requirement in this section if:

(a) the payment that gives rise to the mismatch is made under any of the following:

(i) a *debt interest;

(ii) an *equity interest;

(iii) a *derivative financial arrangement; and

(b) the mismatch, or the part of the mismatch, is attributable to differences in the treatment of the debt interest, equity interest or derivative financial arrangement, arising from the terms of the interest or arrangement; and

(c) the exception in subsection (2) does not apply.

Example:

Redeemable preferences shares that are treated under this Act as a debt interest, and in a foreign country as an equity interest.

Exception for deferrals not exceeding 3 years

832-220(2)    
This exception applies if:

(a) the difference in treatment mentioned in paragraph (1)(b) primarily relates to a deferral in the recognition of income or profits under the *debt interest, the *equity interest or the *derivative financial arrangement; and

(b) the term of the interest or arrangement is 3 years or less.