Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 832.485

  (1)   An entity is a branch hybrid , in relation to a payment made to the entity, if:

  (a)   subsection   (2) applies to the entity in relation to a country and a payment; and

  (b)   subsection   (4) applies to the entity in relation to the payment.

Residence country applies branch profits exemption

  (2)   This subsection applies to an entity in relation to a country (the residence country ) and a payment made to the entity if, for that country:

  (a)   the entity satisfies the residency test in subsection   832 - 555(9) and is a * liable entity in respect of its own income or profits; and

  (b)   the payment is treated as income derived by the liable entity in carrying on a business at or through a * PE in another country; and

  (c)   as a result of an exemption or other tax concession to which that liable entity is entitled in respect of income derived in carrying on a business at or through the PE, the payment is not:

  (i)   if the residence country is Australia-- * subject to Australian income tax; or

  (ii)   if the residence country is a foreign country-- * subject to foreign income tax in that foreign country.

Note:   For the meaning of liable entity , see section   832 - 325.

  (3)   In determining whether subparagraph   (2)(c)(i) is satisfied, disregard the effect of subsection   23AH(4A) of the Income Tax Assessment Act 1936 .

Branch country fails to tax payment

  (4)   This subsection applies to an entity in relation to the other country mentioned in paragraph   (2)(b) (the branch country ) and a payment made to the entity if:

  (a)   the payment is treated as not having been derived in carrying on a business at or through a * PE of the entity, or as otherwise not having a sufficient connection to a taxable presence in the branch country, for the purposes of:

  (i)   if the branch country is Australia--this Act; or

  (ii)   if the branch country is a foreign country--the law of the branch country relating to * foreign income tax (except a tax covered by subsection   832 - 130(7)); and

  (b)   as a result, the payment is not:

  (i)   if the branch country is Australia-- * subject to Australian income tax; or

  (ii)   if the branch country is a foreign country-- * subject to foreign income tax in that foreign country.

Modified meaning of permanent establishment

  (5)   Subsection   (6) applies if:

  (a)   the residence country has entered into, with the branch country:

  (i)   if either the residence country or the branch country is Australia--an * international tax agreement; or

  (ii)   if subparagraph   (i) does not apply--a treaty or other agreement relating to the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital; and

  (b)   the agreement or treaty (as the case requires) contains:

  (i)   if either the residence country or the branch country is Australia--a * permanent establishment article; or

  (ii)   if subparagraph   (i) does not apply--a provision corresponding to a permanent establishment article.

  (6)   A reference in this section to a * PE in a country is taken to be a reference to a permanent establishment within the meaning of the relevant agreement or treaty in the country.