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 832-110   When a payment gives rise to a deduction/deduction mismatch  

832-110(1)  
A payment gives rise to a deduction/deduction mismatch if the payment, or a part or share of the payment:


(a) gives rise to a *foreign income tax deduction in a foreign country in a *foreign tax period; and


(b) also gives rise to:


(i) a deduction in an income year; or

(ii) a foreign income tax deduction in a foreign country (other than the country mentioned in paragraph (a)).
Note:

A deduction/deduction mismatch might give rise to a deducting hybrid mismatch (see Subdivision 832-G ).

832-110(2)  
Each of the following is a deduction component of the *deduction/deduction mismatch:


(a) the *foreign income tax deduction mentioned in paragraph (1)(a);


(b) the deduction mentioned in subparagraph (1)(b)(i), or the foreign income tax deduction mentioned in subparagraph (1)(b)(ii), as the case requires. Amount of the deduction/deduction mismatch

832-110(3)  
The amount of the *deduction/deduction mismatch is the lesser of:


(a) the amount of the *foreign income tax deduction mentioned in paragraph (1)(a); and


(b) the sum of the amounts of the deduction, or foreign income tax deduction, mentioned in subparagraph (1)(b)(i) or (ii). Extended operation in relation to non-payment deductions

832-110(4)  
This section applies in relation to the following amounts in the same way as it applies in relation to a payment:


(a) an amount representing the decline in value of an asset;


(b) an amount representing a share in the net loss of a partnership or other transparent entity.

832-110(5)  
If:


(a) an amount representing a share in the net loss of a partnership gives rise to a deduction; and


(b) in a foreign country:


(i) the same share in the income or profits of the partnership forms part of the tax base of an entity under a law of the foreign country dealing with *foreign income tax (except a tax covered by subsection 832-130(7) ); but

(ii) that share is brought to account in that tax base on an item-by-item basis, instead of on a net basis;

the amount is taken for the purposes of subsection (1) to also give rise to a *foreign income tax deduction in the foreign country, for an amount representing the share in the net loss of the partnership, and equal to the amount of the deduction mentioned in paragraph (a).

832-110(6)  
For the purposes of subsection (4), a reference in this Division to the *scheme under which a payment is made is taken to be a reference to:


(a) if paragraph (4)(a) applies - the scheme under which the asset is held; or


(b) if paragraph (4)(b) applies - the scheme under which the net loss arose.


 

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