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Hybrid and other mismatch arrangements

D4.701 Anti hybrid rules—overview

[For additional key resources on this topic see 'Hybrid mismatches—related content' below.]

TIOPA 2010, ss 259A–259NF (Pt 6A) includes provisions to address tax abitrage arrangements that give rise to tax mismatch outcomes. They are known as the anti-hybrid rules or hybrid mismatch rules and apply from 1 January 2017, replacing the old tax arbitrage rules (see D4.740). Unlike those old rules, there is no test of purpose to be met before the rules can apply; they apply automatically if the conditions are met.

Where an accounting period straddles 1 January 2017, it is split into two notional periods with profits and losses allocated between the two on a just and reasonable basis¹.

These rules were introduced to address the OECD's BEPS action plan on international corporate tax avoidance.

Mismatches can involve either double deductions for the same expense, or deductions for an expense without any corresponding receipt being taxable (described in the legislation as a 'deduction/non-inclusion'