Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p12
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 12/38)
Character Range: 7408072–7411158

this Subdivision is about

      This Subdivision neutralises a hybrid financial instrument mismatch if it involves a deduction, or non‑inclusion, in Australia.
      A deduction/non‑inclusion mismatch is a hybrid financial instrument mismatch if it is attributable to hybridity in the treatment of a financial instrument or an arrangement to transfer a financial instrument, and either the relevant parties are related or the mismatch arose under a structured arrangement.
      There is also an integrity rule that covers payments that are made in lieu of hybrid payments.
      This Subdivision has an extended application in relation to payments that are subject to concessional tax rates in a foreign country.
      A hybrid financial instrument mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision 832‑H.

Table of sections

Operative provisions
832‑180 Deduction not allowable—Australian primary response
832‑185 Inclusion in assessable income—Australian secondary response
832‑190 Exception where entity not a party to the structured arrangement
832‑195 When a hybrid financial instrument mismatch is an offshore hybrid mismatch
832‑200 When a payment gives rise to a hybrid financial instrument mismatch
832‑205 Meaning of Division 832 control group
832‑210 Meaning of structured arrangement
832‑215 Hybrid mismatch
832‑220 Hybrid requirement—payments under financial instruments
832‑225 Hybrid requirement—payments under transfers of certain financial instruments
832‑230 Hybrid mismatch—integrity rule for substitute payments
832‑235 Extended operation of this Subdivision in relation to concessional foreign taxes
832‑240 Adjustment if hybrid financial instrument payment is income in a later year

Operative provisions

832‑180  Deduction not allowable—Australian primary response
 (1) This section applies to an entity if:
 (a) apart from this section, the entity would be entitled to a deduction in an income year in respect of a payment; and
 (b) the deduction is the *deduction component of a *hybrid financial instrument mismatch to which the payment gives rise.
 (2) So much of the deduction as does not exceed the amount of the *hybrid financial instrument mismatch is not allowable as a deduction.

832‑185  Inclusion in assessable income—Australian secondary response
 (1) This section applies to an entity if:
 (a) the entity is the recipient of a payment that gives rise to a *hybrid financial instrument mismatch; and
 (b) the *deduction component of the mismatch is a *foreign income tax deduction; and
 (c) the secondary response is required (see subsection (2)).
 (2) For the purposes of paragraph (1)(c), the secondary response is required unless, in the country in which the *foreign income tax deduction arose, the mismatch is covered by *foreign hybrid mismatch rules that correspond to this Subdivision, or by a law that has substantially the same effect as foreign hybrid mismatch rules that correspond to this