In the 2016-17 and 2017-18 Budgets, the Australian Government announced that it would implement the Organisation for Economic Co-operation and Development’s (OECD’s) rules aimed at eliminating double non-taxation benefits from hybrid mismatch arrangements which exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.
Following up on this, the Treasury has released the exposure draft legislation and its explanatory memorandum on 24 November 2017. The draft legislation will target instances where tax is either deferred or not paid at all from the use of such arrangements. It 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.
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