Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p25
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 25/35)
Character Range: 62911–65633

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 entity, the payments it makes, and its income or profits are identified disregarding tax provisions: see section 832‑30.

Formation country—entity is transparent and payment is not within the tax base
 (2) This subsection applies to a test entity in relation to a country (the formation country) and a payment made to the entity if:
 (a) the test entity is formed in the formation country; and
 (b) for the formation country, the test entity is:
 (i) not a *liable entity; and
 (ii) for Australia—not a *member of a *consolidated group; and
 (c) for the formation country, another entity (an investor) is a liable entity in respect of income or profits of the test entity.
Note: For the meaning of liable entity, see section 832‑325.

Investor country—entity is not transparent
  (3) This subsection applies to a test entity in relation to a country (the investor country) and a payment made to the entity if, in the investor country:
 (a) an investor identified in paragraph (2)(c) is a *liable entity (an investing taxpayer) in respect of its own income or profits, but not in respect of the test entity's income or profits; or
 (b) an entity that is a liable entity (also an investing taxpayer) in respect of the investor's income or profits is not also a liable entity in respect of the test entity's income or profits.

Subdivision 832‑F—Branch hybrid mismatch

Guide to Subdivision 832‑F

832‑450  What this Subdivision is about

      This Subdivision neutralises a branch hybrid mismatch if it involves a deduction in Australia (and the non‑inclusion was not also in Australia).
      A deduction/non‑inclusion mismatch is a branch hybrid mismatch if it is made directly or indirectly to a branch hybrid, and the mismatch would not have arisen, or would have been less, if the residence country had not recognised the permanent establishment.
      An entity is a branch hybrid in relation to a payment made to it if, for the purposes of the tax law of the country in which it is a resident, the payment is treated as being allocated to a permanent establishment in another country, but in the other country, the payment is treated as not being allocated to a permanent establishment in that country.
      A branch hybrid 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
832‑455 Deduction not allowable