Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p24
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 24/35)
Character Range: 60355–63127

832‑400  Hybrid mismatch
 (1) A payment gives rise to a hybrid mismatch if:
 (a) the payment gives rise to a *deduction/non‑inclusion mismatch; and
 (b) the payment meets the hybrid requirement in section 832‑405.

Amount of the hybrid mismatch
 (2) The amount of the *hybrid mismatch is the lesser of:
 (a) the amount of the *deduction/non‑inclusion mismatch; and
 (b) if there is an excess under either subparagraph 832‑405(2)(b)(i) or (3)(b)(i)—the amount of the excess.

Ordering rule
 (3) A payment does not give rise to a hybrid mismatch under this section if it gives rise to a *hybrid financial instrument mismatch or a *hybrid payer mismatch.

832‑405  Hybrid requirement—assume payment was made to an investor
 (1) The payment meets the hybrid requirement in this section if:
 (a) the payment is made directly, or indirectly through one or more interposed entities, to a *reverse hybrid; and
 (b) subsection (2) or (3) applies.

Payment would have been taxed in Australia
 (2) This subsection applies if:
 (a) the investor country identified in subsection 832‑410(3) is Australia; and
 (b) either:
 (i) the amount of the *deduction/non‑inclusion mismatch exceeds the amount that would be the amount of that mismatch if the amount of the payment that was *subject to Australian income tax for an income year was instead worked out on the assumption in subsection (4); or
 (ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch, a *hybrid payer mismatch or a *reverse hybrid mismatch.

Payment would have been taxed in a foreign country
 (3) This subsection applies if:
 (a) the investor country identified in subsection 832‑410(3) is a foreign country; and
 (b) either:
 (i) the amount of the *deduction/non‑inclusion mismatch exceeds the amount that would be the amount of that mismatch if the amount of the payment that was *subject to foreign income tax for a *foreign tax period was instead worked out on the assumption in subsection (4); or
 (ii) on the assumption in subsection (4), the payment would have given rise to a *hybrid financial instrument mismatch, a *hybrid payer mismatch or a *reverse hybrid mismatch.

Assumption—payment was made to the investing taxpayer
 (4) For the purposes of subsections (2) and (3), assume that the payment had instead been made:
 (a) by the same entity; but
 (b) directly to the investing taxpayer identified in paragraph 832‑410(3)(a) or (b).

832‑410  Reverse hybrid
 (1) An entity (the test entity) is a reverse hybrid in relation to a payment made to it if:
 (a) subsection (2) applies to the entity in relation to a country and the payment; and
 (b) subsection (3) applies to the entity in relation to a different country and the payment.
Note: The