![]() ![]() ![]() These rules operate in Australia to neutralise hybrid mismatches by cancelling deductions or including amounts in assessable income. imported hybrid mismatches where receipts are sheltered from tax directly or indirectly by hybrid outcomes in a group of entities or a chain of transactions.deduction or deduction mismatches (D/D) where the one payment qualifies for a tax deduction in 2 jurisdictions.deduction or non-inclusion mismatches (D/NI) where a payment is deductible in one jurisdiction and non-assessable in the other jurisdiction.The rules apply to payments that give rise to hybrid mismatch outcomes which can be summarised as: This has an overall negative impact on competition, efficiency, transparency and fairness. Hybrid mismatch arrangements exploit differences in the tax treatment of an entity or instrument under the laws of 2 or more tax jurisdictions. The ATO, in consultation with the Board of Taxation External Link, designed and implemented hybrid mismatch rules to prevent multinational companies from gaining an unfair competitive advantage by avoiding income tax or obtaining double tax benefits through hybrid mismatch arrangements. Australia's hybrid mismatch rules largely follow The Organisation for Economic Cooperation and Development (OECD) hybrid mismatch and branch mismatch rules from Action Item 2 External Link of the OECD Base Erosion and Profit Shifting (BEPS) action plan.
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