CFM50310 - Derivative contracts: relevant contracts: overview

CTA09/S577

What is a ‘relevant contract’?

For a contract to come within the derivative contract rules within Part 7 CTA09, it must be a relevant contract that meets one of the ‘accounting conditions’ in CTA09/S579 (CFM50200+), and is not excluded from the regime by any statutory provision (CFM50700+).

A relevant contract is defined at S577 as:

These three terms are defined in S580, S581 and S582 respectively of CTA09, and there is guidance at CFM50320+ about their meaning.

It is possible for a derivative to have other derivatives embedded within it. The legislation makes special provision for such ‘hybrid derivatives’ (CTA09/ S584) - see CFM50410.

CTA09/S585 (previously FA96/S94A) specifically treats derivatives embedded within loan relationships as relevant contracts. There is more detail on this at CFM50420.

CTA09/S586 performs a similar function for derivatives embedded in contracts other than loan relationships (see CFM50430).