YC 17Demutualisation of insurers

1. This section applies if an insurer stops being a special corporate entity as a result of demutualisation.

2. Subsection (3) applies if—

3. a person acquires a voting interest or a market value interest in an insurer on the demutualisation of the insurer; and
4. immediately before the demutualisation, the person was a member of the insurer; and
5. the interest is acquired solely as a result of that membership.

6. With effect from the date of the acquisition but subject to section YC 10, the person is treated as having held the voting interest or market value interest at all times during the period in which the insurer was a special corporate entity.

7. Subsection (5) applies if—

8. a person acquires a voting interest or a market value interest in a life insurer on the demutualisation of the life insurer; and
9. the person is the trustee of a trust for the benefit of persons who were members of the life insurer immediately before the demutualisation; and
10. the trust was established before the demutualisation process—
    1. as an interim holding vehicle pending distribution to the members of all shares held by the trust:
    2. to exercise voting rights on behalf of the members in relation to any holding company established before the demutualisation process which holds all the shares in the life insurer; and
11. the Commissioner considers that the trust falls within paragraphs (b) and (c), and has notified the trustee.

12. With effect from the date of the acquisition, the trustee is treated as having held the voting interest or market value interest at all times during the period in which the life insurer was a special corporate entity.

13. Subsection (7) applies if—

14. subsection (5) applies; and
15. the notional single person referred to in section YC 10 acquires a voting interest or market value interest in the life insurer on—
    1. the distribution by the trustee of the shares from the trust:
    2. the issue of shares by the holding company; and
16. the person referred to in section YC 10(1), whose direct voting interest or direct market value interest is treated under section YC 10 as that of the notional single person resulting in the notional single person’s interest in the life insurer,—
    1. was a member of the life insurer immediately before the demutualisation, or is a trustee of a trust for the members; and
    2. acquired the direct voting interest or direct market value interest as a result of the membership.

17. With effect from the date of the acquisition, the notional single person is treated as having existed and having held the voting interest or market value interest at all times during—

18. the period in which the life insurer was a special corporate entity; and
19. the period of the trust before the acquisition by the notional single person.

20. Subsection (9) applies if—

21. a person acquires a voting interest or a market value interest in an insurer on and solely as a result of the demutualisation of the insurer; and
22. the person is the trustee of a community trust for the benefit of some or all of a community which generally includes persons who were members of the insurer immediately before the demutualisation; and
23. the Commissioner considers that the trust falls within paragraph (b) and has notified the trustee.

24. With effect from the date of the acquisition, the trustee is treated as having held the voting interest or market value interest at all times during the period in which the insurer was a special corporate entity.

25. Subsection (11) applies if—

26. an insurer undergoes demutualisation; and
27. the insurer, or another company that is part of the same group of companies (the loss company), had a net loss in a tax year before the 1992–93 tax year; and
28. the loss company carried the loss forward to the 1992–93 tax year under the Income Tax Act 1976; and
29. the loss has not been offset against net income for any period before demutualisation.

30. Despite section IZ 5 (Companies’ tax losses for tax years before 1991–92 tax year) for the purposes of Part I (Treatment of tax losses), with effect from the date on which the insurer stops being a special corporate entity on the demutualisation, the loss is treated as having arisen on the first day of the loss company’s 1992–93 tax year and not to have arisen in the earlier tax year.

31. Subsection (13) applies if—

32. an insurer undergoes demutualisation; and
33. the insurer or another company that is part of the same group of companies has, at the time of the commencement of the process of demutualisation, a credit that arose before 1 April 1992 in—
    1. its imputation credit account.

34. Despite section OZ 4 (Terminating modifications to debits for loss of shareholder continuity), for the purposes of Part O (Memorandum accounts), with effect from the date on which the insurer stops being a special corporate entity on the demutualisation, the credit is treated as having first arisen in the account on 1 April 1992 and not when it actually arose.

Compare

• 2004 No 35 s OD 5A

Notes

• Section YC 17(12)(b)(i): amended, on 1 April 2017, by section 292(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
• Section YC 17(12)(b)(ii): repealed, on 1 April 2017, by section 292(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
• Section YC 17(12)(b)(iii): repealed, on 1 July 2012 (applying for income years beginning on or after that date), by section 133(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
• Section YC 17 list of defined terms FDP account: repealed, on 1 April 2017, by section 292(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).