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Additional amount treated as income under section 34AAA(7) of Act or allowable as deduction under section 34AAA(10) of Act due to capital loss or gain, where financial instrument had not been disposed of

Income Tax (Adjustment for Change of Basis of Computing Profit, Loss or Expense from Financial Instruments of Insurers) Regulations 2022

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—(1) The purpose of this regulation is to determine the additional amount of any other gain, loss or expense in respect of a financial instrument that is treated as income under section 34AAA(7) of the Act or allowable as a deduction under section 34AAA(10) of the Act (as the case may be), where the financial instrument had not yet been disposed of by the insurer on the last day of the basis period for the year of assessment immediately before the year of assessment in which the Comptroller makes the discovery (called in this regulation day X) —(a)under section 34AAA(7) of the Act, that a deduction ought not to have been allowed for a loss or expense in respect of the financial instrument as it is capital in nature; or(b)under section 34AAA(10) of the Act, that a gain in respect of the financial instrument ought not to have been charged with tax as it is capital in nature.(2) The additional amount is computed using the formula B – A, where —(a)A is the value of the financial instrument recognised on day X in Form A1 (which relates to the “Statement of Financial Position”) of the insurer’s MAS return, excluding any amount of accumulated investment income earned on that financial instrument; and(b)B is the cost incurred by the insurer in acquiring the financial instrument.

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