Corporation Tax Act 2009 section 603

Associated transaction treated as derivative contract

Section 603 requires that where an associated transaction is treated as a derivative contract under section 588, the resulting tax credits and debits must be calculated using fair value accounting.

• This section applies specifically in the context of shares with guaranteed returns and similar arrangements covered by Chapter 7 of Part 6 of the Act
• An "associated transaction" is one connected to such arrangements, as defined in section 532(3) of the Act
• Where section 588 treats an associated transaction that is not actually a derivative contract as if it were one, tax credits and debits must be brought into account
• Those credits and debits must be determined on the basis of fair value accounting, meaning assets and liabilities are measured at their current market value rather than historical cost