Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-H - Imported hybrid mismatch  

Operative provisions

SECTION 832-625   Meaning of importing payment  

832-625(1)    
A payment an entity (the payer ) makes is an importing payment in relation to an *offshore hybrid mismatch if:

(a) either:

(i) apart from section 832-610 , the payment, or a part of the payment, gives rise to a deduction in an income year covered by subsection (2); or

(ii) the payment, or a part of the payment, gives rise to a *foreign income tax deduction in a foreign country that has *foreign hybrid mismatch rules, in a *foreign tax period covered by subsection (2); and

(b) the payment is made directly, or indirectly through one or more interposed entities, to another entity; and

(c) the other entity (the offshore deducting entity ) is:

(i) the entity that made the payment that gave rise to the offshore hybrid mismatch; or

(ii) if the offshore hybrid mismatch is a *deducting hybrid mismatch - the *deducting hybrid.

Period within which mismatch may be imported

832-625(2)    
For the purposes of paragraph (1)(a), a *foreign tax period or income year is covered by this subsection if:

(a) it ends at or after the end of the foreign tax period in which a *deduction component of the *offshore hybrid mismatch arose; and

(b) it has at least one day in common with that period.

Indirect importations

832-625(3)    
For the purposes of determining whether a payment is made indirectly through one or more interposed entities to the offshore deducting entity:

(a) it is sufficient if payments exist between each interposed entity, and it is not necessary to demonstrate that each payment in a series of payments funds the next payment, or is made after the previous payment; and

(b) each payment made by an interposed entity must:

(i) give rise to a *foreign income tax deduction in a country that does not have *foreign hybrid mismatch rules; and

(ii) not give rise to a *deduction/non-inclusion mismatch.

Loss surrender and grouping relief

832-625(4)    
Subsection (5) applies if:

(a) a payment is made to an entity (the first entity ); and

(b) another entity (the second entity ) makes a payment (the second payment ) to a third entity; and

(c) the first entity and the second entity are in the same *Division 832 control group; and

(d) under the law of a foreign country relating to *foreign income tax (except a tax covered by subsection 832-130(7) ):

(i) a *foreign income tax deduction arises in respect of the second payment; and

(ii) the foreign income tax deduction may, as a result of a concessional feature of that law, be transferred to, shared with, or otherwise applied by, the first entity.

Note:

For the meaning of Division 832 control group , see section 832-205 .

832-625(5)    
For the purposes of this section, treat:

(a) a payment as having been made by the first entity to the second entity; and

(b) the payment as having given rise to a *foreign income tax deduction (but not a *deduction/non-inclusion mismatch) in the foreign country mentioned in paragraph (4)(d).