Introduction Details of the Section
2.Subsection (1) substitutes new subsections (2) to (7) for subsections (2) to (8) of section 316 TIOPA 2010. New subsection (2) introduces a new criterion in addition to the three existing criteria for a company to be a group treasury company. The new criterion is that the company has made an election under section 316.
3.New subsection (3) provides that new subsection (4) applies to a company if all or substantially all of its activities are treasury activities and all or substantially all of its assets and liabilities relate to such treasury activities.
4.New subsection (4) provides that the relevant amount or relevant amounts of the company for the period of account of the worldwide group are not treated as financing expenses or financing income of the group treasury company. The effect of this is that the financing expenses and financing income of the group treasury company are not included in the group’s debt cap computation.
5.If new subsection (4) does not apply, for example because the company cannot meet the provisions of new subsection (3) throughout the relevant period or the company’s activities are not substantially all treasury activities then the election has effect as described in new subsection(5).
6.New subsection (5) provides that the relevant amounts are not treated as financing expenses or financing income only to the extent that the amounts relate to treasury activities undertaken by the company. Consequently if a relevant amount does not relate to the company’s treasury activities then it cannot be included in the election.
7.New subsection (6) allows for the extent of the relevant amount included in the election under new subsection (5) to be determined on a just and reasonable basis. New subsection (7) continues the current provision that a group treasury company election must be made within three years of the end of the period of account of the worldwide group.
8.Subsection (2) provides that the amendments apply to periods of account of the worldwide group beginning on or after 11 December 2012.