Income Tax Act 2007 section 257LB

The no pre-arranged exits requirements

Section 257LB prevents investors from benefiting from social investment tax relief where there are pre-arranged plans to exit the investment, whether through redemption, repayment, disposal of assets, or cessation of trade by the social enterprise.

• No arrangements may exist during the shorter applicable period for the investment to be redeemed, repaid, repurchased, exchanged, or otherwise disposed of
• The arrangements under which the investment is made must not include plans for the cessation of any trade carried on by the social enterprise (or a connected person), or for the disposal of all or a substantial part of the enterprise's assets
• Arrangements that only take effect on the winding up of a company are generally excluded from these restrictions, unless the issuing arrangements themselves provide for the winding up or the winding up is not for genuine commercial reasons
• These restrictions on issuing arrangements do not apply where the social enterprise is an accredited social impact contractor