Section YC 18 — Income Tax Act 2007: Reverse takeovers

YC 18 Reverse takeovers When subsections (2) and (3) apply (1) Subsections (2) and (3) apply if— (a) a limited attribution company (the initial parent ) is treated under section YC 11(3) as holding all ownership interests in another company (the subsidiary ); and (b) a change in the ownership of the initial parent occurs, or the initial parent ends its existence on an amalgamation (the changeover ); and (c) immediately after the changeover, another limited attribution company (the new parent ) is treated under section YC 11(3) as holding all ownership interests in the subsidiary; and (d) immediately after the changeover, all or part of the ownership interests in the new parent are treated under section YC 11(3) as being held by persons (the initial owners ) who were treated as holding ownership interests in the initial parent immediately before the changeover; and (e) in the case of each initial owner, the percentage ownership interest in the initial parent that the initial owner holds immediately before the changeover is the same as the percentage ownership interest in the new parent that the initial owner holds immediately after the changeover. Loss balance continuity (2) If the initial owners hold a total of 49% or more of the ownership interests in the new parent immediately after the changeover, the new parent is treated for the purposes of Part I (Treatment of tax losses) as— (a) holding, immediately after the changeover, the ownership interests in the subsidiary that the initial parent held immediately before the changeover; and (b) having held the ownership interests for the period for which the ownership interests were treated as held by the initial parent. Credit account continuity (3) If the initial owners hold a total of 66% or more of the ownership interests in the new parent immediately after the changeover, the new parent is treated for the purposes of subparts OB, OC, and OP (which relate to imputation credit accounts and FDP credit accounts) as— (a) holding, immediately after the changeover, the ownership interests in the subsidiary that the initial parent held immediately before the changeover; and (b) having held the ownership interests for the period for which the ownership interests were treated as held by the initial parent. When subsection (5) applies (4) As the provisions of this section are intended to have concessionary effect, subsection (5) applies if— (a) at a time, for a company and a continuity provision, the requirements of the provision are not met; but (b) the requirements would have been met but for the application to a particular extent of subsections (2) and (3). Requirements met (5) The requirements of the continuity provision are treated as met at the time. Meaning of ownership interest (6) In this section and section YC 19B , ownership interest , for a company means— (a) a voting interest in the company determined by applying section YC 4(2) : (b) a market value interest in the company determined by applying section YC 4(5) . Limited application to changeovers before 3 April 2006 (7) Subsections (2) and (3) apply for a person for a changeover occurring before 3 April 2006 only if, before that date, the person files a return of income on the basis that the requirements of a continuity provision are satisfied in relation to the company and the changeover. Defined in this Act: amalgamation , company , continuity provisions , limited attribution company , market value interest , ownership interest , return of income , voting interest , Compare: 2004 No 35 s OD 5AA Section YC 18(6): amended (with effect on 1 January 2011), on 2 November 2012, by section 156(a) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section YC 18(6)(a): amended (with effect on 1 January 2011), on 2 November 2012, by section 156(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section YC 18(6)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 569(1)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section YC 18(6)(b): amended (with effect on 1 January 2011), on 2 November 2012, by section 156(b) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section YC 18(6)(b): amended (with effect on 1 April 2008), on 6 October 2009, by section 569(1)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section YC 18 list of defined terms market value circumstance : repealed (with effect on 1 April 2008), on 6 October 2009, by section 569(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).