Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 832 - Hybrid mismatch rules  

Subdivision 832-I - Dual inclusion income  

Operative provisions

SECTION 832-680   Dual inclusion income, and when an entity is eligible to apply it  

832-680(1)  
An amount of income or profits is dual inclusion income if 2 or more of the following outcomes arise for the amount:


(a) it is *subject to Australian income tax in an income year;


(b) it is *subject to foreign income tax in a foreign country in a *foreign tax period;


(c) it is subject to foreign income tax in a foreign country (other than the country mentioned in paragraph (b)) in a foreign tax period.

Note:

In certain circumstances, dual inclusion income can be applied to reduce the neutralising amount for a hybrid payer mismatch (see section 832-330 ) or a deducting hybrid mismatch (see section 832-560 ).

Effect of Australian foreign income tax offset for underlying taxes

832-680(2)  
For the purposes of subsection (1), if:


(a) an amount of assessable income of an entity (the assessable amount ) would, apart from this subsection, be *subject to Australian income tax; and


(b) an amount of *foreign income tax (except *credit absorption tax, *unitary tax or a withholding-type tax) paid in respect of the assessable amount counts towards a *tax offset for an entity under Division 770 ;

then:


(c) if the amount of the tax offset equals or exceeds the amount of *tax that would, having regard only to the assessable amount and the rate at which tax is imposed on the entity, be payable on the assessable amount - the assessable amount is treated as if it were not subject to Australian income tax; and


(d) if the amount of the tax offset is a proportion of the amount of that tax - then that proportion of the assessable amount is treated as if it were not subject to Australian income tax. Effect of credits etc. for underlying taxes

832-680(3)  
In determining for the purposes of subsection (1) whether an amount of income or profits is *subject to foreign income tax in a *foreign tax period, disregard subsection 832-130(3) . Extension for certain on-payments through grouped entities

832-680(4)  
Subsection (5) applies, if:


(a) an entity is a member of a dual inclusion income group in a country (see subsection (6)); and


(b) an amount of income or profits of the entity (the on-payment amount ) is a payment received by the entity from another member of the dual inclusion income group at a time; and


(c) it is reasonable to conclude that the payment was funded by an amount of income or profits of the other member (the funding income or profits ); and


(d) the funding income or profits were:


(i) if the country mentioned in paragraph (a) is Australia - *subject to Australian income tax; or

(ii) if the country mentioned in paragraph (a) is a foreign country - *subject to foreign income tax in the foreign country; and


(e) the funding income or profits were not *dual inclusion income under subsection (1) (disregarding subsection (5)) in the country.

832-680(5)  
For the purposes of subsection (1), the on-payment amount is treated as if it were:


(a) if the country mentioned in paragraph (4)(a) is Australia - *subject to Australian income tax in the income year in which the time mentioned in paragraph (4)(b) occurs; or


(b) if the country mentioned in paragraph (4)(a) is a foreign country - *subject to foreign income tax in the foreign country in the *foreign tax period in which the time mentioned in paragraph (4)(b) occurs.

832-680(6)  
Two or more entities are members of a group (a dual inclusion income group ) in a country for the purposes of this Division if in that country:


(a) the entity that is a *liable entity in respect of the income or profits of each of the entities is the same entity; and


(b) no other entity is a liable entity in respect of the income or profits of any of the entities. When an entity is eligible to apply dual inclusion income

832-680(7)  
An entity is eligible to apply an amount of *dual inclusion income if the amount is income or profits of:


(a) the entity; or


(b) if paragraph (a) does not apply and the entity is a member of a dual inclusion income group in any country - an entity that is a member of the dual inclusion income group.

832-680(8)  
However, an entity is not eligible to apply the amount if it has already been applied by any entity by a previous application of a provision of this Division.


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