Section EX 9 — Income Tax Act 2007: Direct income interests

EX 9 Direct income interests Categories of direct income interest (1) A person has a direct income interest in a CFC at any time if they hold— (a) any of the shares in the foreign company: (b) any of the shareholder decision-making rights for the company: (c) a right to receive, or to control the application of, any of the income of the company for the accounting period in which the time falls: (d) a right to receive, or to control the application of, any of the value of the net assets of the company, if they are distributed. Percentage of total is counted (2) The person’s direct income interest is the percentage of the total that the person holds. Varying percentages (3) However, if the percentage varies between the different categories, the person’s direct income interest is the highest. Measurement of available subscribed capital (4) When the direct income interest in the category in subsection (1)(a) is calculated, the percentage is the total of the available subscribed capital per share calculated under the slice rule of the shares held as a percentage of the total available subscribed capital per share calculated under the slice rule of all shares in the company. Varying decision-making rights (5) When the direct income interest in the category in subsection (1)(b) is calculated, if the percentage varies between the rights described in the different paragraphs of the definition of shareholder decision-making rights in section YA 1 (Definitions), the highest percentage is taken. Income distribution rights: assumptions (6) When the direct income interest in the category in subsection (1)(c) is calculated, it is assumed that— (a) the income is distributed on the last day of the accounting period; and (b) the person’s entitlement is unchanged during the period; and (c) a payment of interest on a debenture subject to section FA 2 (Recharacterisation of certain debentures), FA 2B (Stapled debt securities), or FZ 1 (Treatment of interest payable under debentures issued before certain date) is a distribution of income. Defined in this Act: accounting period , available subscribed capital , CFC , debentures direct income interest , foreign company , income , interest , pay , share , shareholder decision-making right , slice rule , Compare: 2004 No 35 s EX 9 Section EX 9(6)(c): amended (with effect on 1 April 2008), on 6 October 2009, by section 151 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).