Income Tax Act 2007 section 257MG

The property-managing subsidiaries requirement

Section 257MG sets out the rules that apply when a social enterprise has a subsidiary whose business is mainly concerned with holding or managing land or land-related property.

• Any subsidiary whose business consists wholly or mainly of holding or managing land, or property deriving its value from land, is classified as a "property-managing subsidiary"
• Such a property-managing subsidiary must be a 90% social subsidiary of the social enterprise throughout the shorter applicable period
• Property deriving its value indirectly from land could include shareholdings in land-rich companies, interests in settled property linked to land, or options affecting the disposition of land
• The definition of a qualifying 90% subsidiary is set out separately in section 257MV of the Act