Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p32
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 32/38)
Character Range: 7458405–7461403

tax in that foreign country.

Modified meaning of permanent establishment
 (5) Subsection (6) applies if:
 (a) the residence country has entered into, with the branch country:
 (i) if either the residence country or the branch country is Australia—an *international tax agreement; or
 (ii) if subparagraph (i) does not apply—a treaty or other agreement relating to the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital; and
 (b) the agreement or treaty (as the case requires) contains:
 (i) if either the residence country or the branch country is Australia—a *permanent establishment article; or
 (ii) if subparagraph (i) does not apply—a provision corresponding to a permanent establishment article.
 (6) A reference in this section to a *PE in a country is taken to be a reference to a permanent establishment within the meaning of the relevant agreement or treaty in the country.

Subdivision 832‑G—Deducting hybrid mismatch

Guide to Subdivision 832‑G

832‑525  What this Subdivision is about

      This Subdivision neutralises a deducting hybrid mismatch if it involves a deduction in Australia.
      A deduction/deduction mismatch is generally a deducting hybrid mismatch.
      An entity is a deducting hybrid if a payment it makes is deductible for the purposes of the tax law of 2 countries.
      However, unless the deducting hybrid is a dual resident, there are rules identifying which country is the primary response country. If Australia is not the primary response country, this Subdivision will not neutralise the deducting hybrid mismatch unless:
             (a) the primary response country does not have hybrid mismatch rules; and
             (b) the relevant parties are in the same control group, or the mismatch arose under a structured arrangement.
      The neutralising amount for the deducting hybrid mismatch is reduced by dual inclusion income.
      A deducting 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
832‑530 Deduction not allowable
832‑535 Additional requirements for secondary response
832‑540 When a deducting hybrid mismatch is an offshore hybrid mismatch
832‑545 When an amount gives rise to a deducting hybrid mismatch
832‑550 Deducting hybrid
832‑555 Identifying a secondary response country
832‑560 Neutralising amount
832‑565 Adjustment if deducting hybrid has dual inclusion income in a later year

Operative provisions

832‑530  Deduction not allowable
 (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; and
 (b) the deduction is a *deduction component of a *deducting hybrid mismatch.
 (2) So much of the deduction as does not exceed the *neutralising amount for the *deducting hybrid mismatch is