Income Tax Act 2007 section 604

Deemed increase in repurchase price: price differences under repos

Section 604 ensures that where the rules on manufactured payments deem a payment to have been made in connection with a repo transaction, this deemed payment is taken into account when calculating the price difference under the repo rules.

• This section links the manufactured payments rules to the repo (sale and repurchase) rules in Chapter 5
• Where a manufactured payment is deemed to have been made under the manufactured payments chapter, it affects the calculation of the repo price difference
• The deemed manufactured payment is factored into the repurchase price, increasing it accordingly
• This prevents a mismatch where a deemed manufactured payment might otherwise be ignored in computing the repo pricing adjustment