Arrangements involving residential land

Heading: inserted (with effect on 1 October 2015), on 16 November 2015, by section 18 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).

GB 52 Arrangements involving residential land: companies’ shares
When this section applies

(1)

This section applies when—

(a)

a company owns residential land directly or indirectly for which the relevant date in sections CB 6A(1)(a) or (b) (Disposal within 2 years: bright-line test for residential land) is within 2 years of a disposal of shares that paragraph (c) of this section applies to (company residential land); and

(b)

residential land owned directly or indirectly by the company makes up 50% or more, by market value, of the assets of the company; and

(c)

50% or more of the shares in the company, by market value, are disposed of within a 12-month period, with a purpose or effect of defeating the intent and application of section CB 6A.

Disposal at cost, reacquisition at market

(2)

The company is treated as disposing of the relevant shareholder portion of company residential land to the relevant shareholder for an amount of consideration equal to the total cost to the company of the portion, and the shareholder is treated as acquiring the portion for that total cost and then disposing of it, back to the company, for an amount of consideration equal to the market value of the portion. The company is treated as reacquiring the portion for the market value.

A definition

(3)

In this section, shareholder portion means the proportion that the market value of the shares disposed of by a shareholder bears to the total market value of the shares in the company.

Defined in this Act: company, dispose, residential land, share, shareholder

Section GB 52: inserted (with effect on 1 October 2015), on 16 November 2015, by section 18 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).