Income Tax Act 2007 section 301

Meaning of "qualifying 90% subsidiary"

Section 301 defines what it means for a company to be a "qualifying 90% subsidiary" of another company for the purposes of the venture capital trusts rules, including the ownership, voting power, asset entitlement and profit entitlement thresholds that must be met.

• The parent company must hold at least 90% of the subsidiary's issued share capital and voting power, and be entitled to at least 90% of its distributable assets and profits, with no other person having control of the subsidiary
• No arrangements may exist that would cause any of these conditions to cease being met
• A company can also qualify as a 90% subsidiary indirectly, through a chain of ownership involving a qualifying 100% subsidiary at one level and a qualifying 90% subsidiary at the other
• A qualifying 100% subsidiary is defined in the same way as a qualifying 90% subsidiary, but with all the 90% thresholds replaced by 100%