Section YC 18B — Income Tax Act 2007: Corporate reorganisations not affecting economic ownership

YC 18B Corporate reorganisations not affecting economic ownership When subsection (3) applies (1) Subsection (3) applies if a company (the initial parent ) enters into an arrangement described in subsection (2). Description of arrangement (2) The description of the arrangement for the purposes of subsection (1) is as follows: (a) the initial parent is a limited attribution company that is treated under section YC 11(3) and (4) as holding ownership interests in another company before the arrangement is entered into; and (b) the ownership of the initial parent is reorganised so that another company (the new parent ) is a limited attribution company that is treated under section YC 11(3) and (4) as holding ownership interests in the initial parent after the arrangement is implemented; and (c) the percentage ownership interests (the final percentage ) that a person receives in the new parent is the same as their percentage ownership interests (the initial percentage ) in the initial parent that they cease to hold as a result of the arrangement. For the purposes of this paragraph, a difference between the initial and final percentages is ignored if the difference is caused by a transfer or non-transfer of ownership interests that— (i) facilitates the arrangement, and the relevant ownership interests have a market value that is merely nominal relative to the value of the ownership interests in the new parent: (ii) is the direct result of impossibility or impracticability caused by securities law requirements; and (d) a person holding ownership interests in the initial parent before the arrangement is entered into does not receive a dividend, gift, or other direct benefit as a result of the arrangement. For the purposes of this paragraph,— (i) ownership interests in the initial parent for which paragraph (c)(ii) applies are excluded from a person's holding of ownership interests: (ii) ownership interests in the new parent are excluded from being a dividend, gift, or other direct benefit. Loss balance and credit account continuity (3) For the purposes of the tests of ownership and control in Part I and subparts LP , OA , OB , OC , and OP (which relate to loss balances, tax credits, and memorandum accounts), starting from when the initial parent is first treated under section YC 11(3) and (4) as holding the ownership interests in another company, the new parent is treated as— (a) existing and having the shareholders it has immediately after the arrangement's implementation: (b) holding the ownership interests that the initial parent is treated under section YC 11(3) and (4) as holding: (c) holding all ownership interests in the initial parent. Effect of subsection (3) (4) Subsection (3) does not prevent a change in shareholders, the holdings of ownership interests, or other circumstances, after the implementation of the arrangement from having an effect on the application of the continuity provisions and the provisions described in subsection (3) after the implementation of the arrangement. Definitions (5) In this section,–– (a) ownership interest has the same meaning as in section YC 18(6) , except that for the purposes of this section, excluded preference shares are ignored: (b) excluded preference share means a share that is disregarded, under section 703–37 of the Income Tax Assessment Act 1997 (Aust), in determining whether a company can be a subsidiary member of a consolidated group for the purposes of that Act. Defined in this Act: arrangement , company , continuity provision , dividend , excluded preference share , limited attribution company , ownership interest , share , shareholder Section YC 18B: inserted (with effect on 1 April 2008), on 6 October 2009, by section 570 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section YC 18B(2)(c): amended, on 2 November 2012, by section 157 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88). Section YC 18B(3): amended, on 1 July 2012 (applying for income years beginning on or after that date), by section 134(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).