Income Tax Assessment Act 1997



Division 832 - Hybrid mismatch rules  

Subdivision 832-C - Hybrid financial instrument mismatch  

Operative provisions

SECTION 832-230   Hybrid mismatch - integrity rule for substitute payments  

A payment also gives rise to a hybrid mismatch if:

(a) the payment gives rise to a *deduction/non-inclusion mismatch; and

(b) the payment is made under an *arrangement under which any of the following is transferred:

(i) a *debt interest;

(ii) an *equity interest;

(iii) a *derivative financial arrangement; and

(c) the payment, or a part of the payment, (the substitute payment ) could reasonably be regarded as having been converted into a form that is in substitution for a *return (however described) on the interest or arrangement; and

(d) the return is covered by subsection (2).

This subsection covers a *return (however described) on a *debt interest, an *equity interest, or a *derivative financial arrangement, that is transferred if any of the following apply:

(a) the return is made to the payer of the substitute payment, and is not *subject to foreign income tax or *subject to Australian income tax;

(b) the return is not made to the payer of the substitute payment, but if it had been it would not have been subject to foreign income tax or subject to Australian income tax;

(c) if the return were instead made to the payee of the substitute payment:

(i) it would be subject to foreign income tax or subject to Australian income tax; or

(ii) it would give rise to a *hybrid mismatch under section 832-215 .
Amount of the hybrid mismatch

The amount of the *hybrid mismatch is the amount of the *deduction/non-inclusion mismatch.


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