Section 589 — Corporation Tax Act 2009: Contracts excluded because of underlying subject matter: general

Contracts excluded because of underlying subject matter: general 589 1 A relevant contract is not a derivative contract for the purposes of this Part if its underlying subject matter—

a consists wholly of excluded property (see subsections (2) to (5)), or b is treated as consisting wholly of such property. 2 “ Excluded property ” means—

a intangible fixed assets, b shares in a company other than shares within subsection (3), or c rights of a unit holder under a unit trust scheme other than a scheme in relation to which section 490 (holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights) has effect.

3 The shares within this subsection are—

a shares to which section 524 or 526 (shares subject to outstanding third party obligations and shares which are non-qualifying shares) applies, and b shares in an open-ended investment company in relation to which section 490 has effect.

4 Subsection (2)(a) applies only in relation to a relevant contract which is an option or future.

5 Subsection (2)(b) and (c) apply only in relation to a relevant contract which—

a meets any of conditions A to E in section 591, and b is not designed to produce a return which equates in substance to the return on an investment of money at a commercial rate of interest.

6 Section 590 applies for determining whether the underlying subject matter of a relevant contract is to be treated as consisting wholly of excluded property.