The Australian Taxation Office (ATO) on July 25 issued new guidance on the meaning of a structured arrangement for purposes of the hybrid mismatch rules.
Practical Compliance Guide PCG 2019/6 OECD hybrid mismatch rules – concept of structured arrangement contains practical guidance to assist taxpayers in determining whether the hybrid mismatch rules apply to their circumstances.
The hybrid mismatch rules disallow tax deductions or include an amount income where a non-taxation benefit arises from a cross-border transaction.
While the laws on the taxation of hybrid arrangements mostly address transactions between related parties, a hybrid mismatch may also arise between related or unrelated parties through the use of a structured arrangement, the ATO said.
Whether a payment is made under a structured arrangement requires consideration of whether a hybrid mismatch is priced into the terms of a scheme under which a payment is made or whether it is reasonable to conclude that the hybrid mismatch is a design feature of such a scheme, the ATO said.
The new guidance provides further insight into the meaning of these terms.
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