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YB 12: Partnership and partner
or “Rules for how partners and partnerships are connected for tax purposes”
You could also call this:

“Rules for determining association with look-through companies and their owners”

When you’re dealing with look-through companies, there are some rules about who is considered to be associated with them. If you own part of a look-through company (called a look-through interest) and you’re also a director or employee of that company, you’re considered to be associated with the company.

Even if you’re not a director or employee, you might still be associated with the look-through company if you have effective look-through interests of 25% or more in any right, obligation, or other property status, or thing of the company.

When figuring out if you have 25% or more interests, there are some extra rules. If you’re associated with another person under sections YB 2 to YB 11 and YB 14, you’re treated as if you hold anything that person holds.

There’s also a more specific rule. If you’re associated with another person under sections YB 2, YB 3, YB 4(1)(b) and (2) to (4), YB 7, YB 8, YB 10, YB 11, and YB 14, you’re again treated as if you hold anything that person holds.

These rules help determine who is considered to be associated with a look-through company, which can be important for tax purposes.

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Next up: YB 14: Tripartite relationship

or “How you can be associated with someone through a third person”
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Part Y Definitions and related matters
Associated persons and nominees: Table Y1: Associated person rules

YB 13Look-through companies and owners of interests

  1. A look-through company and a person who has a look-through interest for the look-through company (an owner) and who is a director or employee for the look-through company are associated persons.

  2. If subsection (1) does not apply to a look-through company and an owner, then they are associated persons if the owner has effective look-through interests of 25% or more in a right, obligation, or other property status, or thing of the look-through company.

  3. For the purposes of subsection (2), if a person (person A) and another person (person B) are associated under any of sections YB 2 to YB 11 and YB 14, person A is treated as holding anything held by person B.

  4. For the purposes of subsection (2), if a person (person A) and another person (person B) are associated under any of sections YB 2, YB 3, YB 4(1)(b) and (2) to (4), YB 7, YB 8, YB 10, YB 11, and YB 14, person A is treated as holding anything held by person B.

Notes
  • Section YB 13: inserted, on (applying for income years beginning on or after 1 April 2011), by section 134(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).