(1) 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:
(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).
(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
(3) The amount of the * hybrid mismatch is the amount of the *
deduction/non - inclusion mismatch.