Income Tax Act 2007

601 Repo cases in which deeming rules apply

(1) Section 602 applies if—

(a) there is a repo in respect of securities,

(b) a distribution becomes payable in respect of the securities, and

(c) each of the conditions in the first or second set of relevant conditions is met.

(2) This is the first set of relevant conditions—

• Condition 1.1

  As a result of the repo, the distribution is receivable otherwise than by the person who is the original owner under the repo.

• Condition 1.2

  There is no requirement under the sale agreement or the related agreement (if any) for a person to pay to the original owner, on or before the date when the repurchase price of the securities becomes due, an amount representative of the distribution.

• Condition 1.3

  It is reasonable to assume that, in deciding the repurchase price of the securities, account was taken of the fact that the distribution is receivable otherwise than by the original owner.

(3) This is the second set of relevant conditions—

• Condition 2.1

  The distribution is receivable otherwise than by the person who is the original owner under the repo.

• Condition 2.2

  There is no requirement under the sale agreement or the related agreement (if any) for a person to pay to the original owner, on or before the date when the repurchase price of the securities becomes due, an amount representative of the distribution.

• Condition 2.3

  The original owner or a person connected with the original owner is required under the sale agreement or the related agreement (if any) to pay an amount representative of the distribution.

• Condition 2.4

  It is reasonable to assume that, in deciding the repurchase price of the securities, account was taken of the circumstances mentioned in Conditions 2.1 to 2.3.