Income Tax Act 2007

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CD 27 Property made available intra-group
  • When this section applies

    (1) This section applies when—

    • (a) a transfer of value is made by a company (the first company) to another company (the associated company); and

    • (b) in the absence of this section, the transfer would be a dividend under section CD 6(1)(a)(ii) because the associated company is associated with a shareholder in the first company.

    Intra-group property arrangements worth $10,000 or less

    (2) The transfer of value is not a dividend if—

    • (a) the transfer consists of making property available for less than market value; and

    • (b) the transfer is not a loan; and

    • (c) in the income year of the first company in which the transfer occurs, the total amount of transfers of value by the first company to the associated company that would be dividends for the year in the absence of this section, is $10,000 or less.

    Downward transfers of value

    (3) The transfer of value is also not a dividend if—

    • (a) either—

      • (i) the first company has a voting interest in the associated company; or

      • (ii) the first company is associated with a company (the parent company) that has a voting interest in the associated company and that could have received the transfer of value without the transfer being assessable income or non-resident passive income; and

    • (b) the associated company does not have a voting interest in the first company; and

    • (c) no person, other than the parent company, has both—

      • (i) a voting interest or, if there is a market value circumstance in relation to either the first company or the associated company, a market value interest in the first company; and

      • (ii) a voting interest or, if there is a market value circumstance in relation to either the first company or the associated company, a market value interest in the associated company, of more than 10%.

    Relationship with section FA 3

    (4) Subsection (3) does not apply to a transfer of value that is subject to section FA 3 (Recharacterisation of certain dividends: recovery of cost of shares held on revenue account).

    Rules for identifying voting interests

    (5) For the purposes of subsection (3)(a) and (b),—

    • (a) for the purposes of determining if a company has a voting interest in another company, the look-through rule in section YC 4 (Look-through rule for corporate shareholders) does not apply to treat the initial company’s voting interest as held by its shareholders or anyone else; and

    • (b) a zero voting interest is not a voting interest.

    Rules for identifying voting and market value interests

    (6) For the purposes of subsection (3)(c),—

    • (a) for the purposes of determining the extent to which a person, other than the parent company, has a voting interest or market value interest in the first company or the associated company, the look-through rule in section YC 4 does not apply to treat the person’s voting interest or market value interest as held by the person’s shareholders or anyone else unless the person treated as holder is the parent company; and

    • (b) for the purposes of determining the extent to which a person, other than the parent company, has a voting interest or market value interest of more than 10% in the associated company, the look-through rule in section YC 4 does not apply to treat a voting interest or market value interest of the first company or the parent company in the associated company as held by their respective shareholders or anyone else; and

    • (c) a zero voting interest is not a voting interest and a zero market value interest is not a market value interest.

    Defined in this Act: amount, assessable income, associated person, company, dividend, income year, loan, market value circumstance, market value interest, non-resident passive income, shareholder, tax year, transfer of value, trustee, voting interest

    Compare: 2004 No 35 s CD 19

    Section CD 27(1)(b): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 17(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

    Section CD 27(3)(a)(ii): substituted (with effect on 30 June 2009), on 6 October 2009, by section 17(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

    Section CD 27 list of defined terms FDP: repealed (with effect on 30 June 2009), on 6 October 2009, by section 17(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).