COLL 8.8.2 Income Allocation and Distribution—All QFC Schemes

(1) A QFC scheme must have an annual income allocation date.

Note Annual income allocation date is defined in the glossary.
(2) The annual income allocation date must be within 4 months after the scheme's accounting reference date.

Note Month and accounting reference date are defined in the glossary.
(3) A QFC scheme may have an interim income allocation date and interim accounting periods.

Note Interim income allocation date and interim accounting period are defined in the glossary.
(4) An interim income allocation date must be within 4 months after the day the relevant interim accounting period ends.
(5) A QFC scheme must have a distribution account to which the amount of income allocated to unit classes that distribute income is transferred at the end of the relevant accounting period.

Note Distribution account and class are defined in the glossary.
(6) The amount available for income allocations must be calculated by—
(a) taking the net revenue after taxation decided in accordance with appropriate, internationally accepted professional standards specified in the constitutional document and the latest filed prospectus; and
(b) making any transfers, to the extent permitted by the latest filed prospectus, between the income account and the capital account so that the amount available for income allocations is calculated as if the revenue from debt instruments had been decided without regard to the effect of—
(i) the change in an index of consumer prices during the period, if the scheme's investment objectives, strategies and policy are to invest predominantly in debt instruments for which cash flows are decided by reference to the index (or a similar index of consumer prices) and the transfer relates only to amounts in relation to index-linked, gilt-edged securities; or
(ii) amortisation, if the amount available for income allocations is not less than if the transfers had not been made; and
(c) making any other transfers between the income account and the capital account that are required in relation to any of the following:
(i) stock dividends;
(ii) income equalisation included in income allocations from other collective investment schemes;
(iii) the allocation of payments in accordance with—
(A) for a QFC qualified investor scheme—the latest filed prospectus; and
(B) for a QFC retail scheme—rule 8.6.7 (Allocation of payments to income or capital—QFC retail schemes);
(iv) taxation;
(v) the total amount of income property included in units issued and units redeemed during the period.
Note Income account, capital account, debt instrument, income equalisation, income property and latest filed prospectus are defined in the glossary.
(7) If income is allocated during an accounting period—
(a) with effect from the end of the accounting period, the amount of income allocated to unit classes that accumulate income becomes part of the capital property and requires an adjustment to the proportion of the value of the scheme property to which they relate if other unit classes are in issue during the period; and

Note Capital property is defined in the glossary.
(b) the adjustment under paragraph (a) must ensure that the price remains unchanged despite the transfer of income; and
(c) the amount of any interim distribution must not be more than the amount that, in the operator's opinion, would be available for allocation if the interim accounting period and all previous interim accounting periods in the same annual accounting period, taken together, were an annual accounting period.
Derived from QFCRA RM/2010-05 (as from 1st January 2011)