Source: Taxation In Australia Journal Article
Published Date: 1 Nov 2018
The hybrid mismatch legislation contained in the Treasury Laws Amendment (Tax Integrity and Other Measures No. 2) Bill 2018 received royal assent on 24 August 2018 and applies to income years starting on or after 1 January 2019. On 21 June 2018, the ATO released a draft practical compliance guideline (PCG 2018/D4) which considers the application of the general anti-avoidance rules contained in Pt IVA of the Income Tax Assessment Act 1936 (Cth) in relation to restructures that occur in order to comply with the hybrid mismatch rules. This article focuses on certain aspects of the application of the hybrid mismatch rules on inbound investments. The authors are of the view that foreign investors should consider the potential impact of the hybrid mismatch rules sooner rather than later. It is expected that the identification of potential hybrid mismatches may not be straightforward, particularly as there are some uncertainties regarding key concepts in the legislation and explanatory memorandum, and the knowledge required on the upstream structure and the relevant overseas tax laws.
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