Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p15
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 15/35)
Character Range: 37909–40602

*subject to foreign income tax if:
 (a) apart from this section, the amount would be *subject to foreign income tax; and
 (b) the rate of *foreign income tax (except *credit absorption tax, *unitary tax or a withholding‑type tax) (the lower rate) on the amount under the law of the relevant foreign country is lower than the rate (the ordinary rate) that would ordinarily be imposed on interest income derived by an entity of that kind in the foreign country.

Amount of a deduction/non‑inclusion mismatch
 (3) However, for the purposes of working out the amount of a *deduction/non‑inclusion mismatch that is affected by this section, the amount of a payment that is treated by this section as not being *subject to foreign income tax is to be discounted by multiplying it by the following fraction:
where:
lower rate means the lower rate mentioned in paragraph (2)(b).
ordinary rate means the ordinary rate mentioned in paragraph (2)(b).

832‑240  Adjustment if hybrid financial instrument payment is income in a later year
 (1) There is an adjustment under this section for an entity in an income year (the adjustment year) if:
 (a) an amount was not allowable as a deduction for the entity in an earlier income year under section 832‑180 in respect of a payment that gave rise to a *hybrid financial instrument mismatch; and
 (b) an amount (the taxed amount) of the payment is:
 (i) *subject to foreign income tax in a foreign country in a *foreign tax period that ends within 12 months after the end of the adjustment year; or
 (ii) *subject to Australian income tax in the adjustment year.
 (2) The taxed amount is an amount the entity can deduct in the adjustment year.
 (3) The total amounts deducted under this section in respect of a payment must not exceed the amount that was not allowable as a deduction in respect of the payment as mentioned in paragraph (1)(a).

No adjustment for concessional taxes
 (4) This section does not apply if the *hybrid mismatch would not have arisen apart from section 832‑235.

Subdivision 832‑D—Hybrid payer mismatch

Guide to Subdivision 832‑D

832‑280  What this Subdivision is about

      This Subdivision neutralises a hybrid payer mismatch if it involves a deduction, or non‑inclusion, in Australia.
      A deduction/non‑inclusion mismatch is a hybrid payer mismatch if it is made by a hybrid payer, and the mismatch would not have arisen, or would have been less, if the payment had instead been made by an ungrouped entity. It is also a requirement that the relevant parties are in the same control group or the mismatch arose under a structured arrangement.
      An entity is a hybrid payer if a payment it makes is disregarded for the