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INCOME TAX ASSESSMENT ACT 1997 - SECT 832.410

Reverse hybrid

             (1)  An entity (the test entity ) is a reverse hybrid in relation to a payment made to it if:

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

                     (b)  subsection (3) applies to the entity in relation to a different country and the payment.

Note:          The entity, the payments it makes, and its income or profits are identified disregarding tax provisions: see section 832-30.

Formation country--entity is transparent and payment is not within the tax base

             (2)  This subsection applies to a test entity in relation to a country (the formation country ) and a payment made to the entity if:

                     (a)  the test entity is formed in the formation country; and

                     (b)  for the formation country, the test entity is:

                              (i)  not a * liable entity; and

                             (ii)  for Australia--not a * member of a * consolidated group; and

                     (c)  for the formation country, another entity (an investor ) is a liable entity in respect of income or profits of the test entity.

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

Investor country--entity is not transparent

             (3)  This subsection applies to a test entity in relation to a country (the investor country ) and a payment made to the entity if, in the investor country:

                     (a)  an investor identified in paragraph (2)(c) is a * liable entity (an investing taxpayer ) in respect of its own income or profits, but not in respect of the test entity's income or profits; or

                     (b)  an entity that is a liable entity (also an investing taxpayer ) in respect of the investor's income or profits is not also a liable entity in respect of the test entity's income or profits.

Guide to Subdivision 832-F



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