Hybrid Mismatch

A “hybrid mismatch" is defined as a situation involving a taxpayer or an entity, where:

(a) a payment  under  a  financial  instrument gives rise to a deduction without inclusion outcome and:  

(i) such payment is not included within a reasonable period of time; and

(ii) the mismatch outcome is attributable to differences in the characterization of the instrument or the payment made under it.

(b) a payment to a hybrid entity gives rise to a deduction  without  inclusion  and  that  mismatch outcome is the result of differences in the allocation of payments made to the hybrid entity under the laws of  the  jurisdiction  where  the  hybrid  entity  is established or registered and the jurisdiction of any person with a participation in that hybrid entity;

(c) a  payment  to  an  entity  with  1  or more  permanent  establishments  gives  rise  to  a deduction  without  inclusion  and  that  mismatch outcome is the result of differences in the allocation of payments between the head office and permanent establishment or between 2 or more permanent establishments of the same entity under the laws of the jurisdictions where the entity operates;

(d) a  payment  gives  rise  to  a  deduction without  inclusion  as  a  result  of  a  payment  to  a disregarded permanent establishment;

(e) a payment by a hybrid entity gives rise to a deduction without inclusion and that mismatch is the result of the fact that the payment is disregarded under the laws of the payee jurisdiction;

(f) a  deemed  payment  between  the  head office and permanent establishment or between 2 or more permanent establishments gives rise to a deduction without inclusion and that mismatch is the result  of  the  fact  that  the  payment  is  disregarded under the laws of the payee jurisdiction; or

(g) a double deduction outcome occurs.