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Under section 160AFB, an Australian company is treated as related to any number of linked foreign companies provided that:
- each company in the chain - starting with the Australian company - has at least a 10% voting interest in the company in the tier below it, and
- the Australian company has a direct or indirect interest of at least 5% in the voting shares of each foreign company that is a member of the chain.
A chain of related companies cannot include a trust or partnership - that is, the chain will be broken by the interposition of a trust or partnership.
Related foreign companies
Australian company A has a 50% voting interest in foreign company B, which in turn has a 10% voting interest in foreign company C. Both B and C will be treated as related to A.
Are the companies members of the same group?
Yes - each company in the chain, starting with the Australian company, has at least a 10% voting interest in the company in the tier below it.
Does company A have a 5% or more direct or indirect voting interest?
Yes - company A has a voting interest of 50% (50% x 100%) in company B and a voting interest of 5% (50% x 10%) in company C.
Are the companies related?
Yes - both tests are satisfied for both companies B and C. Therefore, they are both related to company A.
Last modified: 05 Dec 2006QC 18000