Derivatives & Financial Instruments

	January/February 2007
DFI Preview	Derivatives & Financial Instruments

This free e-mail service informs you about the contents of the forthcoming edition of the Derivatives & Financial Instruments.

Issue No. 1 (2007) of the
Derivatives & Financial Instruments is now available online.

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Number 1 - 2007 contains the following:

ARTICLES

Canada

Structuring and Taxation of Hedge Funds

Jack Bernstein and Carol J. Burns

pp. 2-10

The Canadian hedge fund industry has grown dramatically in recent years. This article discusses the structuring and taxation of Canadian hedge funds under current and proposed provisions.

Recommended reading:

Taxing Portfolio Income in Global Financial Markets

Russia

Tax Treatment of Financial Derivatives

Vladimir Vinogradov and Brian Arnold

pp. 11-17

Although the Russian market for financial derivatives is in the early stages of development, the Russian business community has proposed changes to the civil law under which judicial protection will be granted to certain types of derivatives. In addition, special provisions regarding the taxation of derivatives have been introduced in the Tax Code.

Australia

Foreign Insurers and Captives: Licensing and Prudential Supervision

Anton Joseph

pp. 18-20

Two Australian regulatory bodies, ASIC and APRA, oversee financial service providers and insurers. Although the 2001 financial services reform added uncertainty to the meaning of "carrying on business in Australia", the government commissioned a review in 2004 which subsequently cleared up some of that uncertainty.

Italy

Impact of International Accounting Standards on Tax Reporting

Paola Flora

pp. 21-23

The Italian legislature has adopted IAS/IFRS by enacting a decree-law with a two-staged approach. Under this decree-law, the new accounting rules apply to certain entities starting from 2005 or from 2006. The legislature has provided specific tax rules aimed at leaving tax revenue unchanged and ensuring equal tax treatment between companies that are subject to IFRS and companies that are not.

Japan

Tax Treatment of Weather Derivatives

Nick Walters

pp. 24-27

RECENT DEVELOPMENTS

United States

Domestic Reverse Hybrids: Recharacterization of Deemed Interest Payments As Dividends

Anton Joseph

pp. 28-29

A July 2006 IRS Legal Memorandum reflects the US intention to deny treaty benefits to certain transactions involving hybrids. The interaction of the check-the-box practice in the United States and the "fiscally transparent entity" articles in income tax treaties are the subject of this Memorandum.

United States

Mark-to-Market Swap Valuation: The Bank One Case

Anton Joseph

pp. 30-32

The recent US tax court decision in the Bank One case underscores the urgent need for the finalization of regulations regarding a safe harbour valuation method that could be used by securities dealers, thus removing uncertainty for taxpayers. As background, one should also consider the nature of the income derived when derivatives, especially swaps, are held or disposed of by securities dealers.

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Other publications and courses available on Taxation of Financial Instruments:

Taxing Portfolio Income in Global Financial
Markets
[Book]

Transfer Pricing of Intangibles

[Course]

Investment Funds
[Online]

INTERNATIONAL TAXATION OF FINANCIAL INSTRUMENTS