Income Tax Act 2007 section 654

Sale and repurchase arrangements

Section 654 defines what constitutes a "sale and repurchase arrangement" (commonly known as a repo) for the purposes of the accrued income scheme rules in sections 655 to 658.

• A sale and repurchase arrangement exists where securities are sold and the seller (or a connected person) is required to, or chooses to, buy them back under the original or a related agreement
• "Buying back" is broadly defined to include purchasing similar securities, not just the identical ones originally sold, and applies even if the buyer has never previously held the securities
• Securities are treated as "similar" if they carry the same rights to capital and interest against the same persons and the same remedies, regardless of differences in nominal amount, form, or method of transfer
• Agreements are treated as related if they form part of the same overall arrangement, irrespective of when each agreement was entered into