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An Australian resident taxpayer (the taxpayer) establishes a wholly owned limited liability company (LLC) in an offshore jurisdiction. 2. The LLC is treated on a flow-through basis for the purposes of tax in the foreign jurisdiction and is treated as a foreign hybrid for Australian tax purposes. 3. The LLC acquires bonds (or similar instruments) issued in the United Kingdom (UK) by a UK financial institution ('the Issuer'). 4. The bonds offer an enhanced return over those of a similar grade of issuer. 5. The payment of interest on the bonds is claimed by the issuer to attract UK withholding tax at the rate applicable. 6. A securities lending arrangement is put in place within the Issuer's group that is claimed by that group to create a credit known as a 'reverse charge' tax credit. That credit is equal to the amount of the UK withholding tax liable to be paid under UK tax law. 7. A foreign tax credit is claimed by the taxpayer for the amount of UK withholding tax paid. 8. The foreign tax credit exceeds the Australian income tax payable on the net interest income from the arrangement. 9. This excess is claimed to be available for use to reduce Australian tax payable on other foreign sourced income of the taxpayer. 10. The effect of this arrangement is that the taxpayer is provided with an enhanced return funded not by the issuer but through the availability of the foreign tax credits.