Corporation Tax Act 2009 section 583

Underlying subject matter

Section 583 defines what counts as the "underlying subject matter" of each type of derivative contract — options, futures, and contracts for differences — for corporation tax purposes.

• For options and futures, the underlying subject matter is the property that would be delivered on exercise or at delivery, or if that property is itself a derivative contract, the underlying subject matter of that further contract
• For contracts for differences, the underlying subject matter is the property whose value or price fluctuations the contract relates to, or the matter by reference to which a designated index or factor is determined — and this can include interest rates, weather conditions, and creditworthiness
• Interest rates are not treated as the underlying subject matter where they are used only incidentally to calculate a variable payment amount due on a variable date — that is, where the interest rate merely helps determine how much is owed rather than being what the contract's outcome depends on
• A contract's underlying subject matter is not treated as being land, company shares, or unit trust rights simply because income from those types of property happens to be included in the underlying subject matter — so such contracts are not automatically excluded from the derivative contracts regime on that basis