Section CD 6 — Income Tax Act 2007: When is a transfer caused by a shareholding relationship?

CD 6 When is a transfer caused by a shareholding relationship? General test (1) A transfer of value from a company to a person (the recipient ) is caused by a shareholding in the company if— (a) the recipient at any relevant time— (i) holds shares in the company; or (ii) is associated with a shareholder; and (iii) [Repealed] (b) the company makes the transfer because of that shareholding of the relevant shareholder. Indication that test met (2) One indication that a transfer is caused by a shareholding is if the terms of the arrangement that results in the transfer are different from the terms on which the company would enter into a similar arrangement if no shareholding were involved. Deductible distributions of producer boards (3) Despite subsection (1), a transfer of value by a statutory producer board to a member is not caused by a shareholding if— (a) the transfer is a cash distribution; and (b) the distribution is a deduction under subpart HE (Mutual associations) or any other provision of this Act; and (c) the board does not choose to treat the distribution as a dividend under section OB 73 (Statutory producer boards attaching imputation credits to cash distributions). Deductible distributions of co-operative companies (4) Despite subsection (1), a transfer of value by a co-operative company to a shareholder is not caused by a shareholding if— (a) the transfer is a cash distribution; and (b) the distribution is a deduction under subpart HE or any other provision of this Act; and (c) the company does not choose to treat the distribution as a dividend under section OB 82 (When and how co-operative company makes election). Relationship with section DV 18 and subpart HE (5) For the purposes of subsections (3)(b) and (4)(b), subpart HE is not overridden by section DV 18 (Statutory producer boards and co-operative companies). Defined in this Act: arrangement , associated person , company , co-operative company , deduction , share , shareholder , statutory producer board , transfer of value , trustee Compare: 2004 No 35 s CD 5 Section CD 6(1)(a)(ii): amended, on 1 April 2010 (applying for the 2010–11 and later income years), by section 13(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section CD 6(1)(a)(iii): repealed, on 1 April 2010 (applying for the 2010–11 and later income years), by section 13(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).