Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p17
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 17/38)
Character Range: 7420996–7423620

*subject to foreign income tax or *subject to Australian income tax;
 (b) the return is not made to the payer of the substitute payment, but if it had been it would not have been subject to foreign income tax or subject to Australian income tax;
 (c) if the return were instead made to the payee of the substitute payment:
 (i) it would be subject to foreign income tax or subject to Australian income tax; or
 (ii) it would give rise to a *hybrid mismatch under section 832‑215.

Amount of the hybrid mismatch
 (3) The amount of the *hybrid mismatch is the amount of the *deduction/non‑inclusion mismatch.

832‑235  Extended operation of this Subdivision in relation to concessional foreign taxes
 (1) This section applies in working out, for the purposes of this Subdivision, whether an amount is *subject to foreign income tax.
 (2) An amount of income or profits of an entity is treated as if it were not *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 a tax covered by subsection 832‑130(7)) (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.
 (2A) Subsection (2) does not apply if, on the assumption that