Appendix 2 - Non-resident owning body
The 2014 amendments to section FE 4 of the Income Tax Act 2007 introduced the concept of a non-resident owning body. A similar amendment is suggested for investors acting together and the AIL rules.
non-resident owning body, for a company and an income year, means a group consisting of 2 or more members who are each a non-resident or a person meeting the requirements of section FE 2(1)(cc), (d), or (db) and who each hold ownership interests in the company or have a linked trustee holding ownership interests in the company such that,—
(a) if the company, for each member of the group, owes money to the member (the member debt), or to the member’s linked trustee (the trustee debt), or to a company (the subsidiary) in which the member or a linked trustee has ownership interests (the subsidiary debt),—
(i) the member debt for a member, expressed as a fraction of the total member debt for the company, corresponds to the ownership interests or direct ownership interests held by the member, expressed as a fraction of the ownership interests or direct ownership interests held by the members of the group:
(ii) the requirements of subparagraph (i) would be met if each of 1 or more members of the group were treated as holding the ownership interests in the company held by the member, and by linked trustees, and were treated as being owed the member debt, the trustee debt, and an amount for a subsidiary debt equal to the product of the subsidiary debt and the ownership interest held in the subsidiary:
(b) the company is not a widely-held company and the company is funded for the income year under an arrangement between the members of the group concerning debt (the member-linked funding) under financial arrangements meeting the requirements of section FE 18(3B)(b)(i) to (iii) for the members:
(c) the company has member-linked funding provided in a way recommended to, or implemented for, the members as a group by a person