Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p16
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 16/35)
Character Range: 40371–43248

ungrouped entity. It is also a requirement that the relevant parties are in the same control group or the mismatch arose under a structured arrangement.
      An entity is a hybrid payer if a payment it makes is disregarded for the purposes of the tax law of one country (resulting in non‑inclusion), but is deductible for the purposes of the tax law of another country.
      The neutralising amount for the hybrid payer mismatch is reduced by dual inclusion income.
      A hybrid payer 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
832‑285 Deduction not allowable—Australian primary response
832‑290 Inclusion in assessable income—Australian secondary response
832‑295 Exception where entity not a party to the structured arrangement
832‑300 When a hybrid payer mismatch is an offshore hybrid mismatch
832‑305 When a payment gives rise to a hybrid payer mismatch
832‑310 Hybrid mismatch
832‑315 Hybrid requirement—assume payment was made to same recipient but by an ungrouped payer
832‑320 Hybrid payer
832‑325 Meaning of liable entity
832‑330 Neutralising amount
832‑335 Adjustment if hybrid payer has dual inclusion income in a later year

Operative provisions

832‑285  Deduction not allowable—Australian primary response
 (1) This section applies to an entity if:
 (a) apart from this section, the entity would be entitled to a deduction in an income year in respect of a payment; and
 (b) the deduction is the *deduction component of a *hybrid payer mismatch to which the payment gives rise.
 (2) So much of the deduction as does not exceed the *neutralising amount for the *hybrid payer mismatch is not allowable as a deduction.
Note: The neutralising amount is worked out under section 832‑330.

832‑290  Inclusion in assessable income—Australian secondary response
 (1) This section applies to an entity if:
 (a) the entity is the recipient of a payment that gives rise to a *hybrid payer mismatch; and
 (b) the *deduction component of the mismatch is a *foreign income tax deduction; and
 (c) the secondary response is required (see subsection (2)).

When secondary response is required
 (2) For the purposes of paragraph (1)(c), the secondary response is required unless the *foreign income tax deduction is in a foreign country that has *foreign hybrid mismatch rules, or another law that has substantially the same effect as foreign hybrid mismatch rules.

Inclusion of amount in assessable income
 (3) An amount equal to the *neutralising amount for the *hybrid payer mismatch is included in the entity's assessable income for the income year mentioned in subsection (4). The assessable income is taken to have been derived from the same source as the payment.
 (4)