Part 19: Relocation of paragraph 13 of Schedule 13 to FA 2007
Overview
1380.This Part inserts sections 925A to 925F of ITA, which are based on paragraphs 13 to 15 of Schedule 13 to FA 2007, and consequentially amends section 926 of ITA.
1381.Schedule 13 to FA 2007 made provision for the taxation of sale and repurchase of securities, and Schedule 14 to that Act repealed many of the corporation tax provisions for such transactions in Part 17 of ICTA. Chapter 10 of Part 6 of CTA 2009 (relationships treated as loan relationships etc: repos) rewrote the provisions of Schedule 13 to FA 2007 which applied to corporation tax on income.
1382.Paragraph 13 of Schedule 13 to FA 2007 provides for income tax to be deducted at source in certain cases involving the sale and repurchase of securities. It applies provisions of Chapter 9 of Part 15 of ITA, which requires income tax to be deducted at source in certain cases involving manufactured payments.
1383.Part 15 of ITA rewrote all the primary legislation on the deduction of income tax at source which had been enacted before FA 2007. For the convenience of the user, paragraph 13 of Schedule 13 to FA 2007 and the relevant supplementary provisions of paragraphs 14 and 15 of that Schedule are rewritten as a sequence of new sections in Chapter 9 of Part 15 of ITA, and paragraph 13 of that Schedule is repealed.
Section 925A of ITA: Creditor repos
1384.This section deems a company which has a creditor repo to make manufactured payments. It is based on paragraphs 13(1) and 14(6) and (7) of Schedule 13 to FA 2007.
1385.In paragraph 13(1)(a) of Schedule 13 to FA 2007, “the lender” refers to “a company” in the opening words of paragraph 13(1). Section 925A(1) brings this out.
Section 925B of ITA: Debtor repos
1386.This section deems a company which has a debtor repo to receive manufactured payments. It is based on paragraphs 13(2) and (4) and 14(6) and (7) of Schedule 13 to FA 2007.
1387.In paragraph 13(2)(a) of Schedule 13 to FA 2007, “the borrower” refers to “a company” in the opening words of paragraph 13(2). Section 925B(1) brings this out.
Section 925C of ITA: Actual payments ignored if section 925A or 925B applies
1388.This section is a priority rule. It is based on paragraph 13(3) of Schedule 13 to FA 2007.
1389.In a case in which a repo involves an actual manufactured payment (which would be within Chapter 9 of Part 15 of ITA anyway), the actual manufactured payment is deemed not to have been made, and section 925A or 925B applies.
Section 925D of ITA: Power to modify repo sections
1390.This section gives the Treasury the power to modify sections 925A to 925F of ITA in relation to (a) “non-standard” repo cases (see section 925E), (b) cases involving redemption arrangements or (c) both. It is based on paragraph 15(1), (6), (7) and (9) of Schedule 13 to FA 2007.
1391.The effect of paragraph 15(7)(a) of Schedule 13 to FA 2007 is replicated by the existing section 927 of ITA, which applies to this section.
Section 925E of ITA: Cases where section 925D applies: non-standard repos
1392.This section supplements section 925D. It is based on paragraph 15(2) to (5) and (9) of Schedule 13 to FA 2007.
1393.Subsection (1) does not rewrite “in relation to the repo” in paragraph 15(2)(c) of Schedule 13 to FA 2007. Those words are otiose, because the wording of the conditions in subsection (1) ties them fully to the factual situation.
Section 925F of ITA: Interpretation of the repo sections
1394.This section is interpretative. It is based on paragraph 14(1), (3), (4) and (5) of Schedule 13 to FA 2007.
Section 926 of ITA: Interpretation of Chapter
1395.Subsection (1A) is interpretative. It is new. In the Chapter into which sections 925A to 925F are inserted, words and phrases have the same meaning as in Chapter 2 of Part 11 of ITA: see section 926(1) of ITA. The source legislation rewritten by those new sections is not subject to that interpretative rule. It therefore follows that the rule would need to be disapplied in relation to the new sections if it affected how they were to be read. As it seems possible to argue that the rule may have some limited effect on how the new sections are to be read, subsection (1A) is inserted to clarify the position.
