mikes1531
Member of DD Central
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Post by mikes1531 on Jan 9, 2016 2:27:05 GMT
Good question re provision fund accounts. Logically lenders should get no relief unless and to the extent that they have suffered losses. But AFAICS this is not what the draft legislation actually says. This ought to be fixed. If recoveries from protection funds are to be declared as income, and the PFs pay out promptly, I can't see any difference between giving relief on the pre-PF loss and taxing the PF payout versus giving relief on the net loss. Am I missing something?
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pikestaff
Member of DD Central
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Post by pikestaff on Jan 9, 2016 8:54:37 GMT
Good question re provision fund accounts. Logically lenders should get no relief unless and to the extent that they have suffered losses. But AFAICS this is not what the draft legislation actually says. This ought to be fixed. If recoveries from protection funds are to be declared as income, and the PFs pay out promptly, I can't see any difference between giving relief on the pre-PF loss and taxing the PF payout versus giving relief on the net loss. Am I missing something? I think there are some issues with the drafting where there is a PF. Depending on how the PF is structured I think it is possible that in some cases amounts paid by the PF might not be taxed. On RS, I think the legislation does work, at least prior to a Resolution Event. Loans are assigned to the (separate) PF as soon as a payment is late, so lenders have no gains or losses.
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