PART 3REPORTING FUNDS AND THE TREATMENT OF PARTICIPANTS IN REPORTING FUNDS

CHAPTER 5THE COMPUTATION OF REPORTABLE INCOME

Adjustments for special classes of income

Income from non-reporting funds: second case70

1

This regulation applies if a reporting fund has an interest in a non-reporting fund, but the conditions in regulation 69(2) are not met for a period of account.

2

No adjustments may be made under regulations 64 and 65 in respect of the interest in the non-reporting fund.

3

But if the condition specified in paragraph (4) is met, losses made by a reporting fund in earlier periods of account on an investment in a non-reporting fund may be set against gains made on the investment in the non-reporting fund to reduce the reportable income of the reporting fund, but only to the extent that the losses—

a

have not previously had the effect of reducing income for the period of account in which they were incurred, or

b

have not been used previously to reduce gains arising to the non-reporting fund.

4

The condition specified is that the losses in earlier periods of account were all made during periods in which this Part applied continuously to the reporting fund.