Changes to the 2019 international dealings schedule relating to the hybrid mismatch rules (and instructions) have been released.
For the first time, the international dealings schedule includes a number of questions in section G—questions that are intended to capture information relating to the new hybrid mismatch rules as well as a number of new questions in section C seeking further information relating to interests in foreign entities. There are a number of other changes.
As expected, the questions require specific disclosures regarding the application of the hybrid mismatch rules, as well as quantification of amounts of deductions denied or inclusions in income as a result of the rules. The new international dealings schedule also requires detailed disclosures by taxpayers that have restructured or replaced arrangements that would fall within the hybrid mismatch rules. This is aligned with question 22 of the Reportable Tax Position Schedule, Category C.
The hybrid mismatch rules are broadly applicable for years of assessment commencing on or after 1 January 2019. As such, the rules are effective and can affect the deductibility or assessability of amounts incurred or received by Australian taxpayers in respect of arrangements currently in place.
Given the timing of the introduction of the rules, taxpayers need to consider to what extent the new international dealings schedule disclosures could affect their income tax returns for income years ending between December 2018 and November 2019 (years during which the hybrid mismatch rules are not yet applicable).
Read a June 2019 report prepared by the KPMG member firm in Australia
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.