YC 4 Look-through rule for corporate shareholders
When subsection (2) applies

(1)

Subsection (2) applies if a company (the shareholder company) has or is treated as having, whether under subsection (2) or otherwise, a voting interest in another company (the issuing company).

Voting interest attributed to shareholders

(2)

Each person (the shareholder) who has a voting interest in the shareholder company is treated as having (to be added to any other percentage voting interest in the issuing company which the shareholder has) their portion of the shareholder company’s voting interest in the issuing company and the shareholder company is treated as not having that portion.

Calculation of shareholder’s portion

(3)

The shareholder’s portion of the voting interest is calculated by multiplying the shareholder company’s voting interest in the issuing company by the shareholder’s voting interest in the shareholder company.

When subsection (5) applies

(4)

Subsection (5) applies if a company (the shareholder company) is or is treated as having, whether under subsection (5) or otherwise, a market value interest in another company (the issuing company).

Attributing market value interest to shareholders

(5)

Each person (the shareholder) who has a market value interest in the shareholder company is treated as having their portion of the shareholder company’s market value interest in the issuing company and the shareholder company is treated as not having that portion. The shareholder’s portion is added to any other percentage market value interest in the issuing company which the shareholder has at that time.

Calculation of shareholder’s portion

(6)

The shareholder’s portion of the market value interest is calculated by multiplying the shareholder company’s market value interest in the issuing company by the shareholder’s market value interest in the shareholder company.

When subsection (8) applies

(7)

Subsection (8) applies if,—

(a)

in the case of a company (the first company), no direct market value circumstance exists; but

(b)

it is necessary to determine the direct market value interest of a person in the first company in order to apply subsection (5) in relation to an issuing company, whether that issuing company is the first company or any other company, because a direct market value circumstance exists for some other relevant company.

Direct market value interest equal to direct voting interest

(8)

The direct market value interest of the person in the first company is equal to the direct voting interest of the person in the first company.

Defined in this Act: company, direct market value circumstance, direct market value interest, direct voting interest, director, market value interest, voting interest

Compare: 2004 No 35 ss OD 3(3)(d), OD 4(3)(d), (4)

Section YC 4(1): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 245(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).

Section YC 4 compare note: amended (with effect on 1 April 2008), on 6 October 2009, by section 567 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).