Australia To Implement Hybrid Mismatch Rules

; posted on
March 9th, 2018

The Australian government opened a public consultation on the draft legislation for adopting the OECD recommendations to eliminate double non-taxation benefits from hybrid mismatch arrangements. This intention of the government was firstly announced in the 2016-17 Budgets and repeated in 2017-2018 Budget.

Public Consultation

Hybrid mismatch arrangements exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions, resulting in double deduction in both jurisdictions or deduction in one jurisdiction without inclusion in another jurisdiction. In 2017 November the Treasurer announced that the Government would adopt the OECD’s recommendations to address branch mismatch arrangements and would develop a targeted integrity rule to address arrangements used to circumvent the hybrid mismatch rules, releasing an exposure draft legislation and explanatory memorandum for public consultation. This consultation incorporates the previously released exposure draft legislation as well as rules to address branch mismatch arrangements and to introduce the announced integrity rule.

The revised draft legislation will apply broadly to related parties, members of a control group and structured arrangements and is designed to neutralise any hybrid double non-taxation benefits by either denying deductions or including amounts in assessable income.


Responses to the consultation can be lodged either electronically or by post, and feedback should be submitted by 4 April 2018.

Sources: Australian Government

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