Commentary

D7.550 Transfers between funds

Corporate tax
Corporate tax | Commentary

D7.550 Transfers between funds

Corporate tax | Commentary

D7.550 Transfers between funds

The rules in this division apply for accounting periods beginning before 1 January 2013. For accounting periods beginning on or after 1 January 2013 see Division D7.4.

Insurance companies are required to establish a separate fund for their long-term business so proprietary companies will typically have a fund of assets held outside the long-term insurance fund. The tax rules themselves then act to separate a company's long-term business into categories which are treated as though they were separate businesses, with separate identification of income and capital gains, ring-fencing of expenses and taxation treatment generally. Companies legitimately transfer assets between these funds on a regular basis and without further rules it might be possible to ensure that an asset pregnant with gain was transferred to a fund (for example a linked pension fund) in which the gain when realised would be exempt from tax.

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