Introduction Overview Section 33: Interpretation of section 32(2) and (3)
136.This section expands the meaning of “51% subsidiary”. It is based on section 13ZA of ICTA.
137.Subsection (1) is similar to the group relief rule (see section 151). It ensures that the tax relationship between companies is not based simply on share-holding if the share-holding does not represent the true economic relationship. So the subsection looks also at the equity holders’ entitlement to profits and assets. “Equity holders” are defined in subsection(7) by reference to the group relief rules (see Chapter 6 of Part 5 of this Act).
138.Subsection (2) makes clear that the basic test for being a 51% subsidiary in section 1154(2) of this Act still applies.
139.Subsection (3) is similar to the group relief rule (see section 151). Shares held by a share dealer are ignored.
140.Subsection (4) provides the meaning of “trading company” for the quasi-subsidiaries in section 32(2)(b).
141.Subsections (5) and (6) are similar to the group relief rule (see section 153). But subsection (5)(b) and (c) includes an economic test for the 5% ownership requirement in a consortium.