This guidance is relevant to cases where the accounting standards applied result in the separation of an embedded derivative. For details of the accounting treatment for embedded derivatives and hybrid debt see CFM25020.

Application of S616 to hybrid derivatives

‘Hybrid derivative’ is the term used in the legislation for a contract that

viewed as a whole, is a relevant contract, and – while not accounted for as a derivative – satisfies the condition in CTA09/S579(1)(b),

is separated, in accordance with GAAP, into a host contract and one or more embedded derivatives, and

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