Income Tax Act 2007 section 994

Meaning of "connected" persons: supplementary

Section 994 provides supplementary definitions and rules that support the connected persons rules in section 993, including key terms such as "company", "control", "relative" and "settlement", and clarifies how unit trusts, trustees and the reciprocal nature of connection are to be treated.

• A "company" includes any body corporate or unincorporated association but excludes partnerships; a unit trust scheme is treated as if it were a company, with unit holders' rights treated as shares
• Key defined terms include "control" (as defined for close company purposes), "relative" (brother, sister, ancestor or lineal descendant), and "settlement" (as defined for income tax purposes in relation to settlor provisions)
• Where a settlement has no formally appointed trustees, the "trustee" is whoever holds legal ownership of, or manages, the settlement property
• The connected persons relationship is always reciprocal — if person A is connected with person B, then person B is equally connected with person A