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Income Tax Act 2007

Deductions - Expenditure specific to certain entities

DV 15: Amalgamated companies: property passing on resident’s restricted amalgamation

You could also call this:

“Rules for deductions when companies merge in a special way”

When two companies join together in a special way called a resident’s restricted amalgamation, some special rules apply about deductions. These rules are explained in sections FO 8 and FO 10 of the law.

If you’re the new company formed by this joining (called the amalgamated company), you can claim a deduction for money that was written off as bad debt. You can also claim for expenses or losses, including depreciation, that happened because of something the old company (called the amalgamating company) did or didn’t do. This is explained in more detail in section FO 8.

If you’re the old company (the amalgamating company), you can claim a deduction for depreciation on property that you transferred to the new company. But you can only claim for a specific time period, which is described in section FO 10(7).

These rules add to the general permission for claiming deductions, but you still need to follow all the general limitations that apply to deductions.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1514173.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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“Tax deductions for land improvements carry over when companies merge”

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“Rules for expenses and claims within company groups”

Part D Deductions
Expenditure specific to certain entities

DV 15Amalgamated companies: property passing on resident’s restricted amalgamation

  1. This section results from sections FO 8 and FO 10 (which relate to resident’s restricted amalgamations).

  2. On a resident’s restricted amalgamation, an amalgamated company is allowed a deduction for an amount written off as bad, or an amount of expenditure or loss, including an amount of depreciation loss, incurred as a result of something that the amalgamating company did or did not do in the circumstances set out in section FO 8.

  3. On a resident’s restricted amalgamation, an amalgamating company is allowed a deduction for an amount of depreciation loss for property transferred to the amalgamated company for the period described in section FO 10(7).

  4. This section supplements the general permission. The general limitations still apply.

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