Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p21
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 21/38)
Character Range: 7431130–7433795

for an income year was instead worked out on the assumption in subsection (4); or
 (ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch.

Payment would have been taxed in a foreign country
 (3) This subsection applies if:
 (a) the non‑including country identified in subsection 832‑320(3) is a foreign country; and
 (b) either:
 (i) the amount of the *deduction/non‑inclusion mismatch exceeds the amount that would be the amount of that mismatch if the amount of the payment that was *subject to foreign income tax for a *foreign tax period was instead worked out on the assumption in subsection (4); or
 (ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch.

Assumption—payer was an ungrouped entity
 (4) For the purposes of subsections (2) and (3), assume that the payment had instead been made:
 (a) to the same recipient; but
 (b) by an entity that was a *liable entity in the non‑including country identified in subsection 832‑320(3) only in respect of its own income or profits.
Note: For the meaning of liable entity, see section 832‑325.

832‑320  Hybrid payer
 (1) An entity (the test entity) is a hybrid payer in relation to a payment it makes if:
 (a) subsection (2) applies to the entity in relation to a country and the payment; and
 (b) subsection (3) applies to the entity in relation to a different country and the payment.
Note: The entity, the payments it makes, and its income or profits are generally identified disregarding tax provisions: see section 832‑30.

Deducting country—entity is not grouped with recipient
 (2) This subsection applies to a test entity in relation to a country (the deducting country) and a payment the test entity makes if:
 (a) the test entity, or another entity, is a *liable entity in the deducting country in respect of income or profits of the test entity (or a part of those income or profits); and
 (b) that liable entity is not also a liable entity in the deducting country in respect of income or profits of the recipient of the payment.

Non‑including country—entity is grouped with recipient
 (3) This subsection applies to a test entity in relation to a country (a non‑including country) and a payment the test entity makes if:
 (a) the test entity, or another entity, is a *liable entity in the non‑including country in respect of income or profits of the test entity (or a part of the income or profits); and
 (b) that liable entity is also a liable entity in the non‑including country in respect of income or profits of the recipient of the payment.

832‑325  Meaning of