Income Tax Act 2007 section 296

The control and independence requirement

Section 296 sets out the control and independence requirement that a relevant company must satisfy, ensuring it neither controls non-qualifying companies nor is itself controlled by another company.

• The relevant company (together with connected persons) must not control any company that is not a qualifying subsidiary of the relevant company
• The relevant company must not itself be under the control of another company (whether alone or together with persons connected with that other company)
• No arrangements may exist that could cause either the control or the independence element to be breached
• These rules are subject to an exception under section 327(7) relating to share exchanges