The Australian Taxation Office has issued Practical Compliance Guideline (PCG) 2019/6 and Law Companion Ruling (LCR) 2019/3, related to the concept of structure arrangements in relation to Australia’s new hybrid mismatch rules. This contains practical guidance to assist taxpayers assessing the risk of the newly legislated hybrid mismatch rules applying to their circumstances – in particular in relation to the concept of ‘structured arrangement’ in section 832-210 of the ITAA 1997. PCG 2019/6 and LCR 2019/3 are effective from 1 January 2019.
The hybrid mismatch rules were introduced as part of legislation enacted in August 2018 and generally apply to arrangements involving related parties and structured arrangements involving related or unrelated parties for income years starting on or after 1 January 2019.
The PCG 2019/6 clarifies the testing time for determining when a scheme is a structured arrangement, when a payment has been made under a structured arrangement, and when a taxpayer is required to test whether they are a party to a structured arrangement, when a taxpayer is required to test a payment to determine whether it is made under a structured arrangement
The relevant signs for the Commissioner to determine that a hybrid mismatch is priced into the terms of a scheme under which a payment is made, indicators that the Commissioner will consider relevant in determining that it is reasonable to conclude that the hybrid mismatch is a design feature of the scheme, information the Commissioner will rely on and would expect to be available to taxpayers in determining if they are a party to the structured arrangement.
