A repo is effectively a collateralized (secured) loan structured as a sale and repurchase of securities. The party that wants to borrow cash (the original owner) transfers securities (the collateral) to the buyer (the interim holder) who pays the purchase price, which is in economic terms, the loan1. The agreement also provides for the obligatory repurchase of the securities by the original owner or someone connected to him. In legal form this is a sale and repurchase, but in economic substance it is a secured loan, and the capital gains tax provisions seek to reflect this by ignoring the disposal and repurchase, and where it is not ignored, adjusting the sale and repurchase price to match the economic reality of the transaction,
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 16:53