Chapter 11 - 5.6 - Associated Companies

Question 1

Companies are associated, for tax purposes, if…

Answer 1

• one of the companies is under the control of the other
• if they are both under common control of another company

Question 2

What does control mean?

Answer 2

Directly or indirectly owning more than 50% of a company’s issued ordinary share capital, voting power, distributable income or assets on wind up

Question 3

What do we do with companies bought or sold during an accounting period?

Answer 3

They are deemed to be associated for the whole of the accounting period for the purposes of determining limits for marginal relief

Question 4

Are overseas companies included?

Answer 4

Yes

Question 5

Are dormant companies included?

Answer 5

No

Question 6

What do we do to upper and lower limits if there are associated companies?

Answer 6

Divide the upper and lower limits by. the number of companies

Question 7

How do we treat dividends received from associated companies?

Answer 7

They are NOT added to TTP to get augmented profits