Deduction of tax
Paragraph 13 activates the deduction of tax requirements for
manufactured payments made by companies in creditor repos and
received by companies in debtor repos.
Where a “lender” company has a creditor repo and
any income arises on the securities that are initially sold, the
lender is treated for the purpose of the tax deduction rules for
manufactured payments in Chapter 9 of Part 15 of ITA07 (the
successor provision to the tax deduction rules for manufactured
payments in Schedule 23A ICTA88) as paying to the borrower a
manufactured payment representative of that income, on the same
date that the income is payable.
Where a “borrower” company has a debtor repo and
any income arises on the securities that are initially sold, the
borrower is treated for the purpose of the reverse charge rules in
Chapter 9 of Part 15 of ITA07 as receiving from the lender a
manufactured payment representative of that income, on the same
date on which the income is payable. The reverse charge rules in
Chapter 9 of Part 15 of ITA are defined as
The effect of paragraph 13 is to treat all manufactured payments
as deemed payments, to which the deduction of tax requirement is
applied. Therefore any real manufactured payments are ignored for
the purposes of the tax deduction rules.
The existing regulations relating to the deduction of tax
from manufactured payments remain in force (such as SI 1993/2004,
which concerns both the main deduction requirement and the reverse
charge). See section 585 ITA07.
Deemed manufactured payments: other points
