Section YC 17 — Income Tax Act 2007: Demutualisation of insurers

YC 17 Demutualisation of insurers When this section applies (1) This section applies if an insurer stops being a special corporate entity as a result of demutualisation. Former member acquiring voting or market value interest (2) Subsection (3) applies if— (a) a person acquires a voting interest or a market value interest in an insurer on the demutualisation of the insurer; and (b) immediately before the demutualisation, the person was a member of the insurer; and (c) the interest is acquired solely as a result of that membership. When person treated as holding interest (3) With effect from the date of the acquisition but subject to section YC 10 , the person is treated as having held the voting interest or market value interest at all times during the period in which the insurer was a special corporate entity. Trustee for former member acquiring voting or market value interest (4) Subsection (5) applies if— (a) a person acquires a voting interest or a market value interest in a life insurer on the demutualisation of the life insurer; and (b) the person is the trustee of a trust for the benefit of persons who were members of the life insurer immediately before the demutualisation; and (c) the trust was established before the demutualisation process— (i) as an interim holding vehicle pending distribution to the members of all shares held by the trust: (ii) to exercise voting rights on behalf of the members in relation to any holding company established before the demutualisation process which holds all the shares in the life insurer; and (d) the Commissioner considers that the trust falls within paragraphs (b) and (c), and has notified the trustee. When trustee treated as holding interest (5) With effect from the date of the acquisition, the trustee is treated as having held the voting interest or market value interest at all times during the period in which the life insurer was a special corporate entity. Application of section YC 10 to interests of former members (6) Subsection (7) applies if— (a) subsection (5) applies; and (b) the notional single person referred to in section YC 10 acquires a voting interest or market value interest in the life insurer on— (i) the distribution by the trustee of the shares from the trust: (ii) the issue of shares by the holding company; and (c) the person referred to in section YC 10(1) , whose direct voting interest or direct market value interest is treated under section YC 10 as that of the notional single person resulting in the notional single person’s interest in the life insurer,— (i) was a member of the life insurer immediately before the demutualisation, or is a trustee of a trust for the members; and (ii) acquired the direct voting interest or direct market value interest as a result of the membership. When notional single person treated as holding interest (7) With effect from the date of the acquisition, the notional single person is treated as having existed and having held the voting interest or market value interest at all times during— (a) the period in which the life insurer was a special corporate entity; and (b) the period of the trust before the acquisition by the notional single person. Community trust acquiring voting or market value interest (8) Subsection (9) applies if— (a) a person acquires a voting interest or a market value interest in an insurer on and solely as a result of the demutualisation of the insurer; and (b) the person is the trustee of a community trust for the benefit of some or all of a community which generally includes persons who were members of the insurer immediately before the demutualisation; and (c) the Commissioner considers that the trust falls within paragraph (b) and has notified the trustee. When trustee treated as holding interest (9) With effect from the date of the acquisition, the trustee is treated as having held the voting interest or market value interest at all times during the period in which the insurer was a special corporate entity. Net losses of years before 1992–93 (10) Subsection (11) applies if— (a) an insurer undergoes demutualisation; and (b) the insurer, or another company that is part of the same group of companies (the loss company ), had a net loss in a tax year before the 1992–93 tax year; and (c) the loss company carried the loss forward to the 1992–93 tax year under the Income Tax Act 1976; and (d) the loss has not been offset against net income for any period before demutualisation. Net loss treated as for 1992–93 tax year (11) Despite section IZ 5 (Companies’ tax losses for tax years before 1991–92 tax year) for the purposes of Part I (Treatment of tax losses), with effect from the date on which the insurer stops being a special corporate entity on the demutualisation, the loss is treated as having arisen on the first day of the loss company’s 1992–93 tax year and not to have arisen in the earlier tax year. Credit account credits arising before 1 April 2002 (12) Subsection (13) applies if— (a) an insurer undergoes demutualisation; and (b) the insurer or another company that is part of the same group of companies has, at the time of the commencement of the process of demutualisation, a credit that arose before 1 April 1992 in— (i) its imputation credit account: (ii) its FDP account. (iii) [Repealed] Credit treated as arising on 1 April 1992 (13) Despite section OZ 4 (Terminating modifications to debits for loss of shareholder continuity), for the purposes of Part O (Memorandum accounts), with effect from the date on which the insurer stops being a special corporate entity on the demutualisation, the credit is treated as having first arisen in the account on 1 April 1992 and not when it actually arose. Defined in this Act: branch equivalent tax account , community trust , company , direct market value interest , direct voting interest , FDP account , imputation credit account , insurer , life insurer , market value interest , net income , net loss , share , special corporate entity , tax year , trustee , voting interest , Compare: 2004 No 35 s OD 5A Section YC 17(12)(b)(ii): amended, on 1 July 2012 (applying for income years beginning on or after that date), by section 133(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34). Section YC 17(12)(b)(iii): repealed, on 1 July 2012 (applying for income years beginning on or after that date), by section 133(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).