Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p9
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 9/35)
Character Range: 22547–25424

another entity under a provision of a law of a foreign country that corresponds to section 456 or 457 of the Income Tax Assessment Act 1936 (including a tax base that is nil, or a negative amount).

Effect of foreign hybrid mismatch rules
 (6) In determining for the purposes of this section whether a payment is included in a tax base of a law of a foreign country as mentioned in subsection (1), disregard the effect of the following:
 (a) any provisions of *foreign hybrid mismatch rules of a foreign country;
 (b) any provisions of another law of a foreign country relating to *foreign income tax (except *credit absorption tax, *unitary tax or a withholding‑type tax) that has substantially the same effect as foreign hybrid mismatch rules.

832‑135  Safe harbour for translation rates
  If:
 (a) a payment has any of the following effects:
 (i) it gives rise to a deduction;
 (ii) it gives rise to a *foreign income tax deduction;
 (iii) it is *subject to Australian income tax;
 (iv) it is *subject to foreign income tax; and
 (b) for the purposes of this Division, the amount of one or more such effects is to be translated under Subdivision 960‑C into an entity's *applicable functional currency, or into Australian currency;
then it is reasonable for the purposes of item 11A of the table in subsection 960‑50(6) (as modified by the regulations) to apply an exchange rate to each translation so as best to achieve a consistent measure of the extent to which the payment had each such effect.
Note: Item 11A is added to the table in subsection 960‑50(6) by the regulations.

Subdivision 832‑C—Hybrid financial instrument mismatch

Guide to Subdivision 832‑C

832‑175  What this Subdivision is about

      This Subdivision neutralises a hybrid financial instrument mismatch if it involves a deduction, or non‑inclusion, in Australia.
      A deduction/non‑inclusion mismatch is a hybrid financial instrument mismatch if it is attributable to hybridity in the treatment of a financial instrument or an arrangement to transfer a financial instrument, and either the relevant parties are related or the mismatch arose under a structured arrangement.
      There is also an integrity rule that covers payments that are made in lieu of hybrid payments.
      This Subdivision has an extended application in relation to payments that are subject to concessional tax rates in a foreign country.
      A hybrid financial instrument mismatch that is not neutralised by this Subdivision (or by foreign hybrid mismatch rules) is an offshore hybrid mismatch, which might give rise to an imported hybrid mismatch under Subdivision 832‑H.

Table of sections

Operative provisions
832‑180 Deduction not allowable—Australian primary response
832‑185 Inclusion in assessable income—Australian secondary response
832‑190 Exception where entity not a party to the structured arrangement