Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p8
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 8/18)
Character Range: 7493672–7496354

payment is an amount of interest as mentioned in subparagraph (1)(d)(i)—the source of the funds used by the interposed foreign entity to provide the paying entity with the loan or other debt interest in respect of which the payment of interest is made;
 (c) whether the interposed foreign entity engages in substantial commercial activities in carrying on a banking, financial or other similar business.
 (3) The entity mentioned in paragraph (1)(e) is not entitled to the deduction mentioned in that paragraph.
 (4) Subsection (3) does not apply if it is reasonable to conclude that:
 (a) the following requirements are satisfied:
 (i) the amount of the payment is taken into account under Part X of the Income Tax Assessment Act 1936;
 (ii) the sum of the *attribution percentages of each *attributable taxpayer in relation to the interposed foreign entity, for the purposes of sections 456 and 457 of that Act in respect of the income year in which the payment is made, is at least 100%; or
 (b) requirements similar to those in paragraph (a), under the law of a foreign country that has substantially the same effect as Part X of that Act in respect of that foreign country, are satisfied in relation to the interposed foreign entity; or
 (c) assuming that the payment were treated as being divided into 2 separate payments:
 (i) the requirements in paragraph (a) would be satisfied in relation to one of those separate payments; and
 (ii) the requirements in paragraph (b) would be satisfied in relation to the other of those separate payments.
 (5) Subsection (3) does not apply if it is reasonable to conclude that, assuming that the payment had been made directly to the ultimate parent entity:
 (a) the payment would:
 (i) be *subject to foreign income tax at a rate that is the same as, or less than, the foreign country rate; or
 (ii) not be subject to foreign income tax; and
 (b) the payment would not give rise to a *hybrid financial instrument mismatch, a *hybrid payer mismatch or a *reverse hybrid mismatch.
 (6) Subsection (3) does not apply if the payment gives rise to a *hybrid financial instrument mismatch, a *hybrid payer mismatch, a *reverse hybrid mismatch, a *branch hybrid mismatch or an *imported hybrid mismatch.
 (7) Subsection (3) does not apply to the extent that an amount to which the payment relates was not allowable as a deduction under subsection 832‑530(2).

832‑730  Back to back arrangements, etc.
 (1) Subsection (2) applies if:
 (a) an entity (the original paying entity) makes a payment of a kind mentioned in subparagraph 832‑725(1)(d)(i) to another entity; and
 (b) the other entity, or a further entity, pays an amount of that kind to