Taxes Consolidation Act 1997 Schedule 19 paragraph 4

Commodity income

Schedule 19, paragraph 4 provides a reduced distribution test for offshore funds that derive income from dealing in commodities, by allowing half of the commodity dealing profits to be disregarded.

• Only 50% of an offshore fund's commodity dealing profits are taken into account for the distribution test, meaning a fund dealing exclusively in commodities need only distribute 42.5% of its income (i.e. 85% of the included half).
• Commodity dealing losses are not halved — the full loss is taken into account when determining the fund's distributable income.
• Where a fund has both commodity income and other income, expenditure is apportioned on a just and reasonable basis, and the distribution test is applied to the total of the other income plus half the commodity dealing income.
• For equalisation funds with commodity income, half of the accrued commodity dealing income credited to the equalisation account may be disregarded on a disposal.

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