Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p33
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 33/38)
Character Range: 7461167–7464016

entitled to a deduction in an income year; and
 (b) the deduction is a *deduction component of a *deducting hybrid mismatch.
 (2) So much of the deduction as does not exceed the *neutralising amount for the *deducting hybrid mismatch is not allowable as a deduction.
Note: The neutralising amount is worked out under section 832‑560.

832‑535  Additional requirements for secondary response
 (1) However, if there is a secondary response country in relation to the *deducting hybrid mismatch (see section 832‑555), and that country is Australia, section 832‑530 does not apply in relation to the *deducting hybrid mismatch unless:
 (a) the secondary response is required (see subsection (2)); and
 (b) subsection (3) or (4) applies.

When secondary response is required
 (2) For the purposes of paragraph (1)(a), the secondary response is required unless:
 (a) a *liable entity in respect of the income or profits of the *deducting hybrid satisfies the residency test in subsection 832‑555(9) in the primary response country; and
 (b) in the primary response country, the mismatch is covered by *foreign hybrid mismatch rules that correspond to this Subdivision, or by a law that has substantially the same effect as foreign hybrid mismatch rules that correspond to this Subdivision.

Control group
 (3) This subsection applies if the following entities are in the same *Division 832 control group:
 (a) the *deducting hybrid;
 (b) if one or more entities other than the deducting hybrid is a *liable entity in respect of the income or profits of the deducting hybrid in a deducting country—each such liable entity.
Note: For the meaning of Division 832 control group, see section 832‑205.

Structured arrangement
 (4) This subsection applies if the payment is made under a *structured arrangement.
Note 1: For the meaning of structured arrangement, see section 832‑210.
Note 2: If the deduction is a non‑payment deduction, see also subsection 832‑110(5).

832‑540  When a deducting hybrid mismatch is an offshore hybrid mismatch
 (1) A *deducting hybrid mismatch is an offshore hybrid mismatch if:
 (a) the only *deduction components of the mismatch are *foreign income tax deductions; and
 (b) the mismatch is not covered by *foreign hybrid mismatch rules that correspond to this Subdivision, or by a law that has substantially the same effect as foreign hybrid mismatch rules that correspond to this Subdivision, in any country in which a foreign income tax deduction arose.
Note: An offshore hybrid mismatch might give rise to an imported hybrid mismatch: see Subdivision 832‑H.
 (2) The amount of the *offshore hybrid mismatch is the *neutralising amount for the *deducting hybrid mismatch.

832‑545  When an amount gives rise to a deducting hybrid mismatch
 (1) A payment or other amount gives rise to a deducting hybrid mismatch if there is a