Income Tax Act 2007 section 925A

Creditor repos

Section 925A treats a company involved in a creditor repo arrangement as making manufactured payments to the borrower, reflecting any income that arises on the securities during the life of the repo.

• Where a company (the "lender") enters into a creditor repo, the manufactured payments rules in sections 918, 919 and 921 apply as if the lender made payments to the borrower mirroring the income on the securities initially sold.
• These deemed payments are treated as being made under the terms of the repo arrangement and on the dates the underlying income is actually payable.
• The arrangement is treated as being in force from the date the securities are initially sold until either a subsequent sale of those or similar securities takes place, or it becomes clear that no such subsequent sale will occur.
• The effect is to bring creditor repos within the manufactured payments regime, ensuring that income arising on securities during the repo period is properly accounted for under income tax deduction at source rules.