Australian tax guidance clarifies compliance with imported hybrid mismatch rules

The Australian Taxation Office issued draft guidance on April 21 regarding its assessment of compliance with the imported hybrid mismatch rules. The guidance is intended to help taxpayers prepare for compliance reviews.

The imported hybrid mismatch rules aim to prevent taxpayers from entering into structured or other arrangements with related parties that shift the effect of an offshore hybrid mismatch into Australia through the use of non-hybrid instruments such as ordinary loans.

The guidance describes the Commissioner’s risk assessment under the imported hybrid mismatch rules, including how the Commissioner approaches reviewing whether a taxpayer has made reasonable enquiries with respect to the rules for non-structured arrangements. It further addresses the level of supporting information necessary to demonstrate compliance in connection with non-structured arrangements.

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