Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p14
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 14/38)
Character Range: 7413415–7416080

this Division.
 (2) The deduction component of the *hybrid financial instrument mismatch is the *deduction component of the *deduction/non‑inclusion mismatch.
 (3) This subsection applies if the following entities are related for the purposes of subsection (4):
 (a) the entity that made the payment;
 (b) each entity that is a *liable entity in respect of the income or profits of the recipient of the payment.
Note: For the definition of liable entity, see section 832‑325.

Related persons
 (4) Two entities are related for the purposes of this subsection if any of the following apply:
 (a) the entities are in the same *Division 832 control group;
 (b) one of the entities holds a *total participation interest of 25% or more in the other entity;
 (c) a third entity holds a total participation interest of 25% or more in each of the entities.
 (5) For the purposes of subsection (4), treat the *direct participation interest of an entity (the holding entity) in another entity (the test entity) as being the sum of the direct participation interests held by the holding entity and its *associates in the test entity.

Structured arrangement
 (6) This subsection applies if the payment is made under a *structured arrangement.

832‑205  Meaning of Division 832 control group
 (1) Two or more entities are in the same Division 832 control group if any of the following apply:
 (a) each of the entities is a member of a group of entities that are consolidated for accounting purposes as a single group;
 (b) one of the entities holds a *total participation interest of 50% or more in each of the other entities;
 (c) a third entity holds a total participation interest of 50% or more in each of the entities.
 (1A) If a trust is in a Division 832 control group as a result of the operation of subsection (1), then the trustee of the trust is in the same Division 832 control group.
 (2) For the purposes of subsection (1), in determining a *direct participation interest of one entity in another entity, disregard paragraph 350(1)(b) of the Income Tax Assessment Act 1936 (rights of shareholders to vote or participate in certain decision‑making).

832‑210  Meaning of structured arrangement
 (1) A payment that gives rise to a *hybrid mismatch is made under a structured arrangement if:
 (a) the hybrid mismatch is priced into the terms of a *scheme under which the payment is made; or
 (b) it is reasonable to conclude that the hybrid mismatch is a design feature of a scheme under which the payment is made.
 (2) The question whether a *hybrid mismatch is a design feature of a *scheme must be determined by reference to the facts and circumstances that exist