Tax Integrity – Clarifying the Operation of the Hybrid Mismatch Rules

7 days left to have your say
Consultation Type
Exposure Draft

Key Documents

Australia’s hybrid mismatch rules are designed to prevent multinational corporations from exploiting differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions.

In the 2019-20 Budget, the Government announced that it would make a number of technical amendments to clarify the operation of those rules. The amendments will:

  • clarify that the rules apply to multiple entry consolidated groups (MEC groups) in the same way as consolidated groups;
  • clarify that, for the purpose of applying the hybrid mismatch rules, the definition of ‘foreign income tax’ does not include foreign municipal or State taxes;
  • clarify the operation of the hybrid mismatch rules for trusts; and
  • ensure the integrity rule appropriately applies to arrangements that have been designed to circumvent the operation of the hybrid mismatch rules, and specify that, in certain circumstances, the integrity rule can apply where other hybrid mismatch provisions have applied.

The Government has also decided to make technical amendments to:

  • clarify the operation of the dual inclusion income on-payment rule; and
  • allow franking benefits on distributions made on Additional Tier 1 capital instruments, where the distributions give rise to an entitlement to a foreign income tax deduction and the Commissioner is notified that the foreign income tax deduction will not be claimed.

The Government has now released exposure draft legislation and explanatory materials to implement these amendments.

Public consultation on this material will close on 24 January 2020.  


You can submit responses to this consultation up until 24 January 2020. Interested parties are invited to comment on this consultation.

While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.

Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

View our submission guidelines for further information.

How To Respond



Address written submissions to:

Corporate and International Tax Division
Revenue Group
Langton Cres
Parkes ACT 2600


Phone: William Potts +61 2 6263 3323