Taxation (International and Other Provisions) Act 2010 section 259MA

Meaning of "transparent fund"

Section 259MA defines what a "transparent fund" means for the purposes of the hybrid mismatch rules in this Chapter.

• A transparent fund is a collective investment scheme or alternative investment fund (AIF) whose profits or income are treated as belonging directly to its participants for tax purposes, rather than to the fund itself.
• The test for transparency assumes that all of the fund's profits or income arise from UK sources and that all participants are within the charge to UK income tax.
• A participant is someone who has invested in the fund — for example by owning part of the fund's property — but who does not have day-to-day control over how that property is managed.
• The definitions of "collective investment scheme" and "AIF" are drawn from existing financial services legislation: the Financial Services and Markets Act 2000 and the Alternative Investment Fund Managers Regulations 2013 respectively.

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