Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p33
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 33/35)
Character Range: 83369–86115

to a country, if:
 (a) if the country is Australia—the entity is an *Australian entity; or
 (b) if the country is a foreign country:
 (i) the entity is a resident of the foreign country for the purposes of the law of the foreign country relating to *foreign income tax (except *credit absorption tax, *unitary tax or a withholding‑type tax); or
 (ii) the tax base, as it relates to foreign income tax (except credit absorption tax, unitary tax or a withholding‑type tax), includes income from worldwide sources.

832‑560  Neutralising amount
 (1) The neutralising amount for a *deducting hybrid mismatch is worked out by:
 (a) starting with the lesser of the amounts of each deduction or *foreign income tax deduction to which the amount gives rise; and
 (b) reducing (but not below nil) the result from paragraph (a) by the amount of any *dual inclusion income that is available to be applied in working out the neutralising amount.

Australian deduction—inclusions must be in Australia and in the other deducting country
 (2) An amount of *dual inclusion income is available to be applied to reduce the *neutralising amount for a *deducting hybrid mismatch to which section 832‑530 applies if:
 (a) the *deducting hybrid is eligible to apply the amount (see subsection 832‑680(7)); and
 (b) the amount is *subject to Australian income tax for the purposes of subsection 832‑680(1) in the income year mentioned in subsection 832‑530(1); and
 (c) the amount is *subject to foreign income tax for the purposes of subsection 832‑680(1) in the foreign country in which the *foreign income tax deduction arose.
Note: Section 832‑680 modifies the meanings of subject to Australian income tax and subject to foreign income tax for the purpose of working out dual inclusion income.

Offshore hybrid mismatch—inclusions must be in the deducting countries
 (3) An amount of *dual inclusion income is available to be applied to reduce the *neutralising amount for a *deducting hybrid mismatch that is an *offshore hybrid mismatch if:
 (a) the *deducting hybrid is eligible to apply the amount (see subsection 832‑680(7)); and
 (b) the amount is *subject to foreign income tax for the purposes of subsection 832‑680(1) in the foreign country in which one of the *foreign income tax deductions arose, and in the same *foreign tax period; and
 (c) the amount is also subject to foreign income tax for the purposes of subsection 832‑680(1) in the foreign country in which another of the foreign income tax deductions arose.

832‑565  Adjustment if deducting hybrid has dual inclusion 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) in an earlier income year, all or part of a