Treasury Laws Amendment (2020 Measures No. 2) Act 2020 (79 of 2020)

Schedule 1   Hybrid mismatch rules

Part 1   Main amendments

Income Tax Assessment Act 1997

1   Section 832-30

Repeal the section, substitute:

832-30 How this Division applies to entities

Identifying payments between entities etc.

(1) A number of provisions in this Division refer to an entity making a payment to another entity. In determining for the purposes of this Division whether an entity makes or receives a payment, the following are to be disregarded:

(a) subsection 701-1(1) (the single entity rule);

(b) Part IIIB of the Income Tax Assessment Act 1936;

(c) any law of a foreign country that, for the purposes of a foreign tax, treats a different entity as having made the payment, or disregards the payment.

Note 1: The purpose of this subsection is to establish a uniform basis for recognising "payments" between entities across all jurisdictions. (Note that in some countries, a "payment" recognised by this subsection will not have a tax consequence because the payment is disregarded for tax purposes).

Note 2: As a consequence of paragraph (1)(a), a subsidiary member of a consolidated group or MEC group may be a hybrid payer under section 832-320 or a deducting hybrid under section 832-550 (it cannot be a reverse hybrid because of subparagraph 832-410(2)(b)(ii)).

(2) In addition, in the case of a trust or partnership, the trust or partnership, instead of a trustee or partner, is taken, for the purposes of this Division, to do the following things:

(a) make or receive a payment;

(b) hold, acquire or dispose of an asset, interest or other property;

(c) enter into or carry out a *scheme or a part of a scheme.

Identifying income or profits of entities

(3) A number of provisions in this Division refer to the income or profits of an entity. For the purposes of this Division, things recognised in accordance with subsection (1) or (2) as being done by an entity are to be taken into account in identifying the income or profits of the entity.

Assessable income and deductions

(4) A reference in this Division to an amount being included in the assessable income of an entity, or being allowable, or not allowable, as a deduction to an entity, is taken to be a reference to an amount that is so included, or allowable or not allowable, as the case requires, in determining:

(a) in the case of an entity that is a trust - the entity's *net income; or

(b) in the case of a partnership - the partnership's net income or *partnership loss.

This section does not affect the interpretation of other provisions

(5) Nothing in this section affects whether *tax or *foreign income tax is imposed on an entity.

(6) Nothing in this section limits, by implication, any other provision of this Act.