Section 182 — Treatment of connected person and accommodating party. Successor to s.99 of the 1961 Act.
Section 182 is in Chapter XI — General Anti-Avoidance Rule, which runs from section 178 to section 184.
The section supplies four tools for use in this Chapter when determining whether a tax benefit exists. Clause (a) permits parties who are connected persons in relation to each other to be treated as one and the same person. Clause (b) permits any accommodating party to be disregarded. Clause (c) permits the accommodating party and any other party to be treated as one and the same person. Clause (d) permits the arrangement to be considered or looked through by disregarding any corporate structure.
A tax benefit is usually engineered by spreading a single economic transaction across several persons and entities, so that no one of them, looked at alone, shows any advantage. The section removes that protection at the point where the benefit is measured, allowing connected persons to be collapsed into one, an inserted party to be ignored, and a corporate form to be looked through.
Each clause is permissive — parties "may be treated" as one, an accommodating party "may be disregarded" — so these are powers exercised on the facts, not automatic recharacterisations. Their reach is bounded: the opening words confine them to this Chapter and to the single question whether a tax benefit exists, so nothing here declares an arrangement impermissible or fixes any consequence. The controlling definitions are in section 184, where an accommodating party is one whose main purpose of participation is to obtain a tax benefit for the assessee, whether or not it is connected to any party. Clause (d) is the widest, because disregarding a corporate structure requires the entity to be neither connected nor accommodating.
A group routes a transaction through a wholly owned company and a second company owned by a relative, so that on each entity's own figures no advantage appears. In testing whether a tax benefit exists, clause (a) allows the connected persons to be treated as one and the same person, and clause (d) allows the interposed corporate structure to be disregarded, so the arrangement is measured on its combined effect. If one of the companies took part mainly to secure the benefit for the assessee, clause (b) allows it to be disregarded altogether.
In the reasons set out in a notice from the Principal Commissioner or Commissioner under section 274(2), and in directions of the Approving Panel — normally the reasoning by which an authority says a benefit exists despite the transaction being split between entities.
the parties who are connected persons in relation to each other may be treated as one and the same person
the arrangement may be considered or looked through by disregarding any corporate structure
See the full 1961 to 2025 concordance.
See the notifications index.