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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 in a similar way"

Illustration for Income Tax Act 2007

You need to know when two companies are associated persons. Two companies are associated persons if a group of people own 50% or more of both companies. This can be through voting interests or market value interests. You are also associated if a group of people control both companies in other ways. If you and another person are associated under certain rules, such as those in sections YB 4 to YB 14, you are treated as owning what the other person owns. Some companies are not considered associated, like state enterprises or Crown Research Institutes. In some cases, two companies are not associated if one is a non-resident or a portfolio investment entity. This can affect how taxes are applied to these companies.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1523001.

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YB 1: What this subpart does, or

"This part of the law explains how to determine if two people are associated for tax purposes."

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YB 3: Company and person other than company, or

"Who is treated as part of a company or not"

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), 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), 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 1 is a portfolio investment entity or an entity that qualifies for PIE status.

                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(6)(ab): inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
                • 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).