Income Tax (Trading and Other Income) Act 2005 section 608U

Meaning of "51% investment" and "25% investment"

Section 608U defines what constitutes a "51% investment" and a "25% investment" in another person, for the purposes of the offshore receipts in respect of intangible property rules in sections 608P and 608Q.

• A person (P) has a 51% investment in another person (C) if P holds more than half of the voting power, disposal proceeds rights, income distribution rights, or winding-up asset entitlements in C.
• A 25% investment applies the same tests but at a lower threshold: P needs to hold at least a quarter rather than more than half.
• Detailed interpretive rules from sections 464(2) to (11) and 465 of the Taxation (International and Other Provisions) Act 2010 apply when determining whether either investment threshold is met.
• When applying those TIOPA rules in the context of a 51% investment, any reference to a "25% investment" in section 464(10) of TIOPA should be read as a reference to a "51% investment".