Taxation (International and Other Provisions) Act 2010 section 391

Meaning of "impairment loss"

Section 391 defines what an "impairment loss" means for the purposes of the corporate interest restriction rules, and clarifies that certain debits related to fair-valued assets are excluded.

• An impairment loss is a loss arising from the impairment (i.e. a reduction in value) of a financial asset.
• Debits relating to impairment losses on financial assets accounted for at fair value are not treated as impairment loss debits under these rules.
• The definition is relevant because impairment losses are excluded from the calculation of "tax-interest" amounts, which determines how much interest expense a company can deduct.
• This distinction matters in practice because the corporate interest restriction rules treat impairment losses differently from ordinary loan relationship debits.