Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 832.555

  (1)   This section applies if an amount gives rise to a * deducting hybrid mismatch, other than a deducting hybrid mismatch covered by subsection   (2).

Dual residents--no secondary response

  (2)   This subsection covers a * deducting hybrid mismatch if:

  (a)   the only * liable entity in respect of income or profits of the * deducting hybrid is the deducting hybrid; and

  (b)   the liable entity satisfies the residency test in subsection   (9) in both deducting countries.

Note 1:   For the meaning of liable entity , see section   832 - 325.

Note 2:   If the deducting hybrid is a dual resident, the mismatch may be neutralised by any country.

Country is a primary response country unless this section provides otherwise

  (3)   A country in which the amount gives rise to a deduction or * foreign income tax deduction (a deducting country ) is a primary response country in relation to the * deducting hybrid mismatch unless the country is identified as the secondary response country under subsection   (4), (5), (6), (7) or (8).

Both countries recognise the same liable entity--residence country is secondary response

  (4)   If:

  (a)   the * deducting hybrid is itself the * liable entity in each deducting country; and

  (b)   in one deducting country, the deducting hybrid does not satisfy the residency test in subsection   (9); and

  (c)   in the other deducting country, the deducting hybrid does satisfy the residency test;

then the country mentioned in paragraph   (b) is the secondary response country.

  (5)   If:

  (a)   in both deducting countries, the same entity is the * liable entity in respect of the income or profits of the * deducting hybrid; and

  (b)   in one deducting country, the liable entity does not satisfy the residency test in subsection   (9); and

  (c)   in the other deducting country, the liable entity does satisfy the residency test;

then the country mentioned in paragraph   (b) is the secondary response country.

Countries recognise different liable entities--non - parent country is secondary response

  (6)   If:

  (a)   the * liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

  (b)   in one deducting country, the * deducting hybrid is the liable entity;

then the country mentioned in paragraph   (b) is the secondary response country.

  (7)   If:

  (a)   the * liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

  (b)   the * deducting hybrid is not the liable entity in either country; and

  (c)   in one deducting country, the entity that is a liable entity is also a liable entity in respect of the income or profits of the entity that is the liable entity in the other deducting country;

then the country mentioned second in paragraph   (c) is the secondary response country.

  (8)   If:

  (a)   the * liable entity for one deducting country is a different entity to the entity that is the liable entity for the other deducting country; and

  (b)   subsections   (6) and (7) do not apply; and

  (c)   in one deducting country, the deducting hybrid and the liable entity both satisfy the residency test in subsection   (9);

then the country mentioned in paragraph   (c) is the secondary response country.

Residency test

  (9)   An entity satisfies the residency test in this subsection in relation to a country, if:

  (a)   if the country is Australia--the entity is an * Australian entity; or

  (b)   if the country is a foreign country:

  (i)   the entity is a resident of the foreign country for the purposes of the law of the foreign country relating to * foreign income tax (except a tax covered by subsection   832 - 130(7)); or

  (ii)   the tax base of the entity, as it relates to foreign income tax (except a tax covered by subsection   832 - 130(7)), includes income from worldwide sources.