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YB 1: What this subpart does
or “This subpart explains how people or groups are connected for tax purposes”
You could also call this:

“Rules for when two companies are considered associated for tax purposes”

Two companies are considered associated if a group of people owns 50% or more of the voting interests in both companies. This also applies if there’s a special situation called a “market value circumstance” and a group owns 50% or more of the market value interests in both companies. Companies are also associated if a group controls both of them in any other way.

When figuring out if companies are associated, if two people are associated under certain rules, anything one person owns is treated as if the other person owns it too.

There are some exceptions to these rules. Some types of companies, like state enterprises, mixed-ownership enterprises, Crown Research Institutes, Crown health enterprises, and companies in the same group as these, aren’t considered associated just because a group controls both of them.

In international tax situations, two companies aren’t associated if only one of them is from another country. For land-related rules, two companies aren’t associated if one of them is a special type of investment company called a portfolio investment entity or qualifies to be one.

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Next up: YB 3: Company and person other than company

or “Rules for determining connection between companies and individuals based on voting or market value interests”
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Part Y Definitions 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).