Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p30
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 30/38)
Character Range: 7453442–7456249

the meaning of structured arrangement, see section 832‑210.

832‑475  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 mismatch, or a part of the mismatch, meets the hybrid requirement in section 832‑480.

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 832‑480(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, a *hybrid payer mismatch or a *reverse hybrid mismatch.

832‑480  Hybrid requirement—payment made directly or indirectly to a branch hybrid
 (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 *branch hybrid; and
 (b) subsection (2) or (3) applies.

Payment would have been taxed in Australia
 (2) This subsection applies if:
 (a) the residence country identified in subsection 832‑485(2) 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 or a *hybrid payer mismatch.

Payment would have been taxed in a foreign country
 (3) This subsection applies if:
 (a) the residence country identified in subsection 832‑485(2) 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 or a *hybrid payer mismatch.

Assumption—residence country treated payment as non‑branch income
 (4) For the purposes of subsections (2) and (3), assume that the payment was instead treated as income derived by the *liable entity but not in carrying on a business at or through a *PE in another country for the purposes of:
 (a) if the residence country is Australia—this Act; or
 (b) if the residence country is a foreign country—the law of the residence country relating to *foreign income tax (except a tax covered by subsection 832‑130(7)).

832‑485  Branch