Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_3:p6
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 6/10)
Character Range: 103008–105732

(b) the payment is not subject to Australian income tax; and
             (c) the highest rate of foreign income tax (the foreign country rate) on the payment is 10% or less; and
             (d) it is reasonable to conclude (having regard to certain matters) that the entity, or one of the entities, that entered into or carried out all part of the scheme did so for a purpose including a purpose of enabling a deduction to be obtained in respect of the payment, or enabling foreign income tax to be imposed on the payment at a rate of 10% or less.
      However, the deduction will not be disallowed if, assuming that the payment had been made directly to the ultimate parent entity:
             (a) the rate of foreign income tax on the payment in the country of residence of the ultimate parent entity would be less than or equal to the foreign country rate; and
             (b) the payment would not give rise to a hybrid mismatch of a particular kind.

Table of sections

Operative provisions
832‑725 Payments made to interposed foreign entity (integrity measure)—denial of deduction
832‑730 Back to back arrangements, etc.
832‑735 Determination may specify kinds of scheme and circumstances where no denial of deduction

Operative provisions

832‑725  Payments made to interposed foreign entity (integrity measure)—denial of deduction
 (1) Subsection (3) applies if:
 (a) an entity (the paying entity) makes a payment under a *scheme to a *foreign entity (the interposed foreign entity), either directly, or indirectly through one or more interposed *Australian trusts or Australian partnerships (within the meaning of Part X of the Income Tax Assessment Act 1936); and
 (b) the paying entity, the interposed foreign entity and another foreign entity (the ultimate parent entity) are in the same *Division 832 control group; and
 (c) the ultimate parent entity is not controlled by any other entity (other than an entity that is not a member of the Division 832 control group); and
 (d) the payment is of:
 (i) an amount of interest (within the meaning of subsection 128A(1AB) of the Income Tax Assessment Act 1936); or
 (ii) an amount under a *derivative financial arrangement; and
 (e) the paying entity is entitled to a deduction in an income year in respect of the payment (disregarding this section); and
 (f) the payment is not *subject to Australian income tax; and
 (g) either:
 (i) the payment is *subject to foreign income tax in one or more foreign countries, and the highest rate (the foreign country rate) at which the payment is subject to foreign income tax is 10% or less; or
 (ii) the payment is not subject to foreign income tax; and
 (h) it is reasonable to conclude (having regard to the matters