Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-B - Concepts relating to mismatches  

Operative provisions

SECTION 832-105   When a payment gives rise to a deduction/non-inclusion mismatch  

Australian deduction

832-105(1)    
If:

(a) a deduction (other than a deduction that is solely attributable to a *currency exchange rate effect) is allowable to an entity in an income year in respect of a payment (including a part or share of the payment); and

(b) the amount of the deduction exceeds the sum of the amounts of the payment that are:

(i) *subject to foreign income tax in a foreign country in a *foreign tax period that starts no later than 12 months after the end of the income year; or

(ii) *subject to Australian income tax for the income year;

then the deduction is the deduction component of a deduction/non-inclusion mismatch to which the payment gives rise.

Note:

A deduction/non-inclusion mismatch might give rise to a hybrid financial instrument mismatch (see Subdivision 832-C ), a hybrid payer mismatch (see Subdivision 832-D ), a reverse hybrid mismatch (see Subdivision 832-E ), or a branch hybrid mismatch (see Subdivision 832-F ).

Foreign income tax deduction

832-105(2)    
If:

(a) an entity is entitled to a *foreign income tax deduction in a foreign country in a *foreign tax period in respect of a payment (including a part or share of the payment); and

(b) the amount of the foreign income tax deduction exceeds the sum of the amounts of the payment that are:

(i) *subject to foreign income tax in a foreign country in a foreign tax period that starts no later than 12 months after the end of the foreign tax period in which the foreign income tax deduction arose; or

(ii) *subject to Australian income tax for an income year that starts no later than 12 months after the end of the foreign tax period in which the foreign income tax deduction arose; and

(c) the foreign income tax deduction is not solely attributable to:

(i) any currency exchange rate fluctuations; or

(ii) a difference between an expressly or implicitly agreed currency exchange rate for a future date or time and the applicable currency exchange rate at that date or time;

then the foreign income tax deduction is the deduction component of a deduction/non-inclusion mismatch to which the payment gives rise.

Amount of the deduction/non-inclusion mismatch

832-105(3)    
The amount of the *deduction/non-inclusion mismatch is the amount of the excess worked out under paragraph (1)(b) or (2)(b), as applicable.