Document ID: chunk:federal_register_of_legislation:F2024L01740:front:0:p125
Version: federal_register_of_legislation:F2024L01740
Segment Type: other
Provision Reference: 
Character Range: 313511–316372

Transitional CbCR Safe Harbour—Hybrid Arbitrage Arrangements
 (1) For the purposes of applying subsection 8‑10(1) in relation to an MNE Group and a jurisdiction:
 (a) exclude from the MNE Group's profit or loss before income tax for the jurisdiction any expense or loss arising as a result of a deduction/non‑inclusion arrangement, or duplicate loss arrangement, entered into after 15 December 2022; and
 (b) exclude from the MNE Group's income tax expense for the jurisdiction any income tax expense arising as a result of a duplicate tax recognition arrangement entered into after 15 December 2022.
 (2) Subsections (3) and (4) apply if:
 (a) the expense or loss mentioned in paragraph (1)(a) arises as a result of an arrangement that is a duplicate loss arrangement; and
 (b) the arrangement is a duplicate loss arrangement because of paragraph 8‑125(1)(a); and
 (c) all Constituent Entities of the MNE Group including the expense or loss in their financial statements are located in the same jurisdiction.
 (3) A Filing Constituent Entity for the MNE Group must choose one of the Constituent Entities for the purposes of subsection (4).
 (4) Treat subsection (1) as not applying with respect to the expense or loss in the financial statements of that Constituent Entity.

8‑115  Meaning of Hybrid Arbitrage Arrangement
  A Hybrid Arbitrage Arrangement is any of the following:
 (a) a deduction/non‑inclusion arrangement;
 (b) a duplicate loss arrangement;
 (c) a duplicate tax recognition arrangement.

8‑120  Meaning of deduction/non‑inclusion arrangement
 (1) A deduction/non‑inclusion arrangement is an arrangement:
 (a) under which a Constituent Entity (the investor) of an MNE Group directly or indirectly provides credit or otherwise makes an investment in another Constituent Entity of the MNE Group (the recipient); and
 (b) the provision of the credit or making of the investment results in an expense or loss in the financial statements of the recipient;
to the extent that:
 (c) there is no commensurate increase in the revenue or gain in the financial statements of the investor; or
 (d) the investor is not reasonably expected over the life of the arrangement to have a commensurate increase in its taxable income.
 (2) Despite subsection (1), an arrangement is not a deduction/non‑inclusion arrangement to the extent that the relevant expense or loss is solely with respect to Additional Tier One Capital.
 (3) For the purposes of paragraph (1)(d), the investor does not have a commensurate increase in its taxable income to the extent that:
 (a) if an amount is included in its taxable income—the amount included in its taxable income is offset by a tax attribute (such as a loss carry forward or an unused interest carry forward) with respect to which a valuation adjustment or accounting recognition adjustment:
 (i) has been made; or
 (ii)