is the amount of income, for the person’s owner’s interest in current amount financial arrangements as debtor from the application of section HB 4 that the person returned for income years before the 2017–18 income year. – (Clauses 98 and 262) Summary of proposed amendment The bill proposes that qualifying company (QC) status will cease if there is a change in control of the company. Application date The amendment will apply for the 2017–18 and later income years. Key features A change of control will be measured using a continuity test. The proposed new shareholder continuity limitation in section HA 6 of the Income Tax Act requires a continuity interest” of at least 50 percent for the continuity period”. “minimum “QC The continuity period will extend from the date the bill receives Royal assent to the last day in the relevant income year. The QC interest” is defined to mean “minimum the lowest voting interest or market value interest during the continuity period. A breach of this requirement will trigger the loss of QC status under the standard QC rules. For the purposes of the shareholder continuity measurement, changes to shareholding resulting from property relationship settlements or the death of a shareholder will be ignored when measuring a change of control. To ease compliance, the proposed continuity test will apply prospectively to changes in shareholding from the date of enactment. Background Qualifying companies are partial look-through vehicles that allow for the profits of the company to be taxed in the same way as a standard company but, unlike a standard company, capital gains and un-imputed dividends can be distributed tax-free to shareholders during the course of business. QCs in place when the new LTC regime came into force on 1 April 2011 were allowed to continue, pending an ultimate decision on the future of QCs. There are still around 70,000 QCs.
current amount is the amount of income, for the person’s owner’s interest in financial arrangements as debtor from the application of section HB 4 that the person returned for income years before the 2017–18 income year. – (Clauses 98 and 262) Summary of proposed amendment The bill proposes that qualifying company (QC) status will cease if there is a change in control of the company. Application date The amendment will apply for the 2017–18 and later income years. Key features A change of control will be measured using a continuity test. The proposed new shareholder continuity limitation in section HA 6 of the Income Tax Act requires a “minimum continuity interest” of at least 50 percent for the “QC continuity period”. The continuity period will extend from the date the bill receives Royal assent to the last day in the relevant income year. The “minimum QC interest” is defined to mean the lowest voting interest or market value interest during the continuity period. A breach of this requirement will trigger the loss of QC status under the standard QC rules. For the purposes of the shareholder continuity measurement, changes to shareholding resulting from property relationship settlements or the death of a shareholder will be ignored when measuring a change of control. To ease compliance, the proposed continuity test will apply prospectively to changes in shareholding from the date of enactment. Background Qualifying companies are partial look-through vehicles that allow for the profits of the company to be taxed in the same way as a standard company but, unlike a standard company, capital gains and un-imputed dividends can be distributed tax-free to shareholders during the course of business. QCs in place when the new LTC regime came into force on 1 April 2011 were allowed to continue, pending an ultimate decision on the future of QCs. There are still around 70,000 QCs.
2016-commentary-archcrm.docx