Commentary

C3.1807 Exempt gains—sale and repurchase of securities: repo transactions

Capital gains tax
Capital gains tax | Commentary

C3.1807 Exempt gains—sale and repurchase of securities: repo transactions

Capital gains tax | Commentary

C3.1807 Exempt gains—sale and repurchase of securities: repo transactions

A repo is effectively a collateralized (secured) loan structured as a sale and repurchase of securities. The party that wants to borrow cash (the original owner) transfers securities (the collateral) to the buyer (the interim holder) who pays the purchase price, which is in economic terms, the loan1. The agreement also provides for the obligatory repurchase of the securities by the original owner or someone connected to him. In legal form this is a sale and repurchase, but in economic substance it is a secured loan, and the capital gains tax provisions seek to reflect this by

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