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Income Tax Act 2007

Definitions and related matters - Associated persons and nominees - Table Y1: Associated person rules

YB 2: Two companies

You could also call this:

"When two companies have the same owners or are controlled by the same people, they are called 'associated companies'"

Two companies are associated if a group of people own 50% or more of both companies. You need to look at who has voting interests in each company. This means they have a say in what the company does.

Two companies can also be associated if a special market value circumstance exists. This means a group of people have 50% or more market value interests in both companies. You can find more information about market value circumstances in sections YB 4 to YB 14.

If one person and another person are associated under certain rules, the first person is treated as holding anything the second person holds. You can find these rules in sections YB 4 to YB 14, YB 7, YB 8, and YB 10 to YB 14.

Some companies are not considered associated, like state enterprises or Crown Research Institutes. Two companies are not associated if one is a non-resident and the other is not. They are also not associated if either company is a portfolio investment entity or an entity that qualifies for PIE status.

There are some exceptions to these rules, like if a company is a foreign PIE equivalent. You should check the rules that apply to your situation to see if two companies are associated. This can affect how taxes are paid and other financial matters.

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YB 1: What this subpart does, or

"How to know if two people are associated under the law"

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YB 3: Company and person other than company, or

"Rules for when a company and a person are considered connected"

Part YDefinitions and related matters
Associated persons and nominees: Table Y1: Associated person rules

YB 2Two companies

  1. Two companies are associated persons if a group of persons exists whose total voting interests in each company are 50% or more.

  2. Two companies are associated persons if—

  3. a market value circumstance exists for either company; and
    1. a group of persons exists whose total market value interests in each company are 50% or more.

      1. Two companies are associated persons if a group of persons exists who control both companies by any other means.

      2. For the purposes of subsections (1) to (3), and if subsection (5) does not apply, if a person (person A) and another person (person B) are associated under any of sections YB 4 to YB 14, person A is treated as holding anything held by person B.

      3. For the purposes of subsections (1) to (3) and the land provisions, if a person (person A) and another person (person B) are associated under any of sections YB 4(1)(b) and (2) to (4), YB 7, YB 8, and YB 10 to YB 14, person A is treated as holding anything held by person B.

      4. Subsection (3) does not apply to 2 companies if either or both are—

      5. a state enterprise:
        1. a mixed-ownership enterprise:
          1. a Crown Research Institute:
            1. a Crown health enterprise:
              1. a company that is part of the same group of companies as an entity referred to in any of paragraphs (a) to (c).

                1. In the international tax rules, 2 companies are not associated persons if 1, but not both, is a non-resident.

                2. For the purposes of the land provisions, 2 companies are not associated persons if either or both are—

                3. a portfolio investment entity:
                  1. an entity that qualifies for PIE status:
                    1. a foreign PIE equivalent.

                      Notes
                      • Section YB 2: substituted, on , by section 563(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                      • Section YB 2(4): amended, on , by section 136(1) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section YB 2(5): amended, on , by section 136(2) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section YB 2(6)(ab): inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
                      • Section YB 2(8): replaced, on , by section 136(3) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section YB 2 list of defined terms foreign PIE equivalent: inserted, on , by section 136(4) of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
                      • Section YB 2 list of defined terms mixed-ownership enterprise: inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).