Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p14
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 14/35)
Character Range: 35432–38149

hybrid requirement in this section if:
 (a) the payment that gives rise to the mismatch is made under an *arrangement covered by subsection 832‑215(2); and
 (b) the mismatch, or the part of the mismatch, is attributable to differences in the treatment of the arrangement; and
 (c) the exception in subsection (2) of this section does not apply.

Exception for deferrals not exceeding 3 years
 (2) This exception applies if:
 (a) the difference in treatment mentioned in paragraph (1)(b) primarily relates to a deferral in the recognition of income or profits under the *arrangement; and
 (b) the term of the arrangement is 3 years or less.

832‑230  Hybrid mismatch—integrity rule for substitute payments
 (1) A payment also gives rise to a hybrid mismatch if:
 (a) the payment gives rise to a *deduction/non‑inclusion mismatch; and
 (b) the payment is made under an *arrangement under which any of the following is transferred:
 (i) a *debt interest;
 (ii) an *equity interest;
 (iii) a *derivative financial arrangement; and
 (c) the payment, or a part of the payment, (the substitute payment) could reasonably be regarded as having been converted into a form that is in substitution for a *return (however described) on the interest or arrangement; and
 (d) the return is covered by subsection (2).
 (2) This subsection covers a *return (however described) on a *debt interest, an *equity interest, or a *derivative financial arrangement, that is transferred if any of the following apply:
 (a) the return is made to the payer of the substitute payment, and is not *subject to foreign income tax or *subject to Australian income tax;
 (b) the return is not made to the payer of the substitute payment, but if it had been it would not have been subject to foreign income tax or subject to Australian income tax;
 (c) if the return were instead made to the payee of the substitute payment:
 (i) it would be subject to foreign income tax or subject to Australian income tax; or
 (ii) it would give rise to a *hybrid mismatch under section 832‑215.

Amount of the hybrid mismatch
 (3) The amount of the *hybrid mismatch is the amount of the *deduction/non‑inclusion mismatch.

832‑235  Extended operation of this Subdivision in relation to concessional foreign taxes
 (1) This section applies in working out, for the purposes of this Subdivision, whether an amount is *subject to foreign income tax.
 (2) An amount of income or profits of an entity is treated as if it were not *subject to foreign income tax if:
 (a) apart from this section, the amount would be *subject to foreign income tax; and
 (b) the rate of *foreign income tax (except *credit absorption tax, *unitary tax or a withholding‑type tax) (the lower