Plain language law

New Zealand law explained for everyone

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:

"What makes two companies associated for tax purposes"

Illustration for Income Tax Act 2007

Two companies are associated if some people own 50% or more of both companies. You treat two companies as associated if some people control both companies. If you and another person are associated under certain rules, like those in sections YB 4 to YB 14, you are treated as owning what the other person owns. Two companies are not associated if one is not a New Zealand resident. Some companies are not associated, like state enterprises or Crown Research Institutes. For land rules, some companies are not associated, like portfolio investment entities. You need to know what a state enterprise, Crown Research Institute, and portfolio investment entity are to understand these rules. These rules help decide if two companies are associated for tax purposes. Associated companies have special tax rules.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

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

This page was last updated on — View changes

Topics:
Money and consumer rights > TaxesBusiness > Industry rules
Previous

YB 1: What this subpart does, or

"How to know if two people are associated for tax purposes"

Next

YB 3: Company and person other than company, or

"Who is linked to a company under the Income Tax Act 2007"

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).