Income Tax Act 2007 section 257QK

Insignificant payments ignored for the purposes of section 257QJ

Section 257QK provides that certain small or insignificant repayments of share capital to other persons can be disregarded when assessing whether social investment (SI) relief should be withdrawn or reduced under section 257QJ.

• A repayment of share capital is ignored if both the market value of the shares concerned and the amount received by the member are insignificant compared with the market value of the remaining issued share capital of the social enterprise or its subsidiary.
• For the purposes of this test, the target shares are assumed to have been cancelled at the time the repayment is made.
• This exemption does not apply if repayment arrangements existed at any time in the period beginning 12 months before the investment date and ending at the end of that investment date.
• Repayment arrangements include any provisions for repayment by the social enterprise or any subsidiary, or entitlements for anyone to receive such a repayment, at any time within the longer applicable period.