Section GB 12 — Income Tax Act 2007: Temporary reductions in totals for control interest categories

GB 12 Temporary reductions in totals for control interest categories When this section applies (1) This section applies when,— (a) before the end of a quarter, a reduction in the total of direct control interests in a foreign company occurs in a control interest category (the total reduction ); and (b) the total reduction results in a person (the interest holder ) having an increased income interest or control interest in a foreign company (the interest increase ); and (c) within 365 days after the total reduction, an increase occurs in the total for the control interest category (the total increase ); and (d) the interest increase has the effect of increasing an attributed CFC loss of— (i) the interest holder; or (ii) an associated person of the interest holder; or (iii) another person holding an income interest in the interest holder, if the interest holder is a CFC; and (e) the total reduction and total increase are part of an arrangement which has an effect of defeating the intent and application of the international tax rules. Treatment of interest increase (2) The interest increase is treated as not having occurred, when the interest holder’s control interest or income interest in the foreign company at the end of the quarter is calculated, to the extent to which the total increase reverses the interest increase. Defined in this Act: arrangement , associated person , attributed CFC loss , CFC , control interest , control interest category , direct control interest , foreign company , income interest , international tax rules , quarter , Compare: 2004 No 35 s GC 9(2), (7)