Taxation (International and Other Provisions) Act 2010 section 239

Securities subject to conversion

Section 239 defines a type of "deduction scheme" involving securities that are subject to conversion, as part of the rules designed to prevent tax mismatches arising from certain financial arrangements.

• This section applies where a party to a scheme holds securities that may be converted into, or exchanged for, different securities or other property.
• A deduction scheme involving convertible securities arises where the conversion feature means that a tax deduction can be obtained in one jurisdiction without a corresponding taxable receipt in another.
• The section sets out two separate conditions that must be considered when determining whether securities are subject to conversion — these are treated as distinct tests rather than a single combined requirement.
• This is the fourth of seven sections that together define the various types of arrangement that can constitute a "deduction scheme" for the purposes of the tax mismatch provisions.