Income Tax Act 2007 section 809RZZA

Annualised basis for mixed funds containing TRF capital

Section 809RZZA establishes an annualised method for determining the composition of transfers made from mixed funds that contain Temporary Repatriation Facility (TRF) capital during a tax year.

• Where a mixed fund contains TRF capital at any point in a tax year, the composition of every transfer out of that fund during the year is determined using an annualised approach rather than on a transaction-by-transaction basis
• A six-step process aggregates all transfers of each type into deemed single transfers at the year end, determines their composition, and then allocates that composition proportionately back to each actual transfer
• Transfers are classified into three categories: transfers to a TRF capital account, "condition A" transfers (broadly, remittances to the UK), and all other transfers (treated as offshore transfers)
• TRF capital is treated as its own distinct category of income or capital within the mixed fund and is not reclassified as any other type

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