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

The basic rules

Section 259BC defines "ordinary income" for the purposes of the hybrid mismatch rules and explains how tax refunds and specific reliefs affect whether income qualifies as ordinary income.

• Ordinary income is income brought into account before deductions when calculating taxable profits, but income taxed at a nil rate or reduced by specific exemptions, reliefs or credits is excluded from the definition.
• Where all or part of the relevant tax on taxable profits is refunded, the income used to calculate those profits ceases to be ordinary income (in whole or proportionally), unless the refund results from qualifying loss relief.
• Income that would normally be taxable but is not taxed solely because the recipient is a qualifying institutional investor is still treated as ordinary income for hybrid mismatch purposes.
• The CFC charge and foreign CFC charges are excluded from the definition of "relevant tax" and are dealt with separately under section 259BD.