Document ID: chunk:federal_register_of_legislation:C2018A00084:clause:1_1:p13
Version: federal_register_of_legislation:C2018A00084
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 13/35)
Character Range: 32733–35673

given rise to the hybrid mismatch.

832‑215  Hybrid mismatch
 (1) A payment gives rise to a hybrid mismatch if:
 (a) the payment is made under any of the following:
 (i) a *debt interest;
 (ii) an *equity interest;
 (iii) a *derivative financial arrangement;
 (iv) an *arrangement covered by subsection (2); and
 (b) the payment might reasonably be expected to give rise to a *deduction/non‑inclusion mismatch; and
 (c) the mismatch that might reasonably be expected to arise, or a part of that mismatch, meets a hybrid requirement in section 832‑220 or 832‑225.

Transfers of financial instruments
 (2) An *arrangement is covered by this subsection if:
 (a) the arrangement is any of the following:
 (i) a reciprocal purchase agreement (otherwise known as a repurchase agreement);
 (ii) a securities lending arrangement;
 (iii) a similar arrangement; and
 (b) an entity acquires any of the following under the arrangement:
 (i) a *debt interest;
 (ii) an *equity interest;
 (iii) a *derivative financial arrangement.

Amount of the hybrid mismatch
 (3) The amount of the *hybrid mismatch is:
 (a) the amount of the *deduction/non‑inclusion mismatch, unless paragraph (b) applies; or
 (b) if only a part of the deduction/non‑inclusion mismatch meets a hybrid requirement mentioned in paragraph (1)(c)—the amount of that part of the deduction/non‑inclusion mismatch.

832‑220  Hybrid requirement—payments under financial instruments
 (1) A *deduction/non‑inclusion mismatch, or a part of such a mismatch, meets the hybrid requirement in this section if:
 (a) the payment that gives rise to the mismatch is made under any of the following:
 (i) a *debt interest;
 (ii) an *equity interest;
 (iii) a *derivative financial arrangement; and
 (b) the mismatch, or the part of the mismatch, is attributable to differences in the treatment of the debt interest, equity interest or derivative financial arrangement, arising from the terms of the interest or arrangement; and
 (c) the exception in subsection (2) does not apply.
Example: Redeemable preferences shares that are treated under this Act as a debt interest, and in a foreign country as an equity interest.

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 *debt interest, the *equity interest or the *derivative financial arrangement; and
 (b) the term of the interest or arrangement is 3 years or less.

832‑225  Hybrid requirement—payments under transfers of certain financial instruments
 (1) A *deduction/non‑inclusion mismatch, or a part of such a mismatch, meets the 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