Commentary on Sections Overview Overview Section 658: Chargeable gain or allowable loss treated as accruing
1817.This section provides for a chargeable gain or allowable loss to arise when a debtor relationship within section 656 comes to an end if an amount is paid to discharge a company’s obligations under that relationship. It is based on paragraphs 12(1) and (11B) and 45K(3), (3A) and (3B) of Schedule 26 to FA 2002.
1818.The gain or loss is calculated on the assumptions that:
	there is a disposal of an asset which is the contract for differences in section 656;
	the cost of that asset is the amount paid to discharge the company’s obligations; and
	the consideration for the disposal is the amount of the proceeds of the issue of the security representing the debtor relationship (or, if the company became a party to that relationship at a time after it was created, the carrying value of the host contract at that time).
1819.See the paragraph headed “disapplication of section 658” in Part 10 of Schedule 2 which applies if the liability representing the debtor relationship was owed by the company immediately before its first accounting period to begin on or after 1 January 2005.