ITTOIA05/S559 specifies three conditions that must be met for the disposal to involve a guaranteed return.
Condition A is that the disposal must be one of
two or more ‘related transactions’.
ITTOIA05/S566 explains what is meant by related transactions.
Transactions are related if all of them are entered into in
pursuance of the same ‘scheme or arrangement’. This
means any case where it would be reasonable to assume that none of
them would have been entered into separately, having regard to the
likely effect of the transactions and the circumstances in which
they were entered into.
Related transactions include transactions between different
parties, who may be different to the parties who entered into the
scheme.
‘Scheme or arrangement’ includes
‘understandings of any kind, whether or not they are legally
enforceable’.
Condition B is that those transactions must be
designed to produce a guaranteed return.
ITTOIA05/S559 (5) explains what is meant by ‘designed
to produce a guaranteed return’. Considering the transactions
together the likely effect of the transactions and the
circumstances in which they were entered into, it must be
reasonable to assume that the main purpose or one of the main
purposes is to produce a guaranteed return from one or more
disposal of futures or options.
‘Guaranteed return’ is defined in ITTOIA05/S560 (
SAIM7060).
Condition C is that the guaranteed return
comprises the return from the disposal, or the return from a number
of disposals, of which the disposal is one, taken together (see
SAIM7070).
‘Entering into a transaction’ includes making the
disposal.
