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Income Tax Act 2007

Recharacterisation of certain transactions - Consolidated groups of companies

FM 2: Consolidation rules

You could also call this:

“Rules for treating multiple companies as one for tax purposes”

The consolidation rules affect how the Income Tax Act 2007 applies to companies that are part of a consolidated group. When you’re part of a consolidated group, the law treats you as if you were one big company instead of separate ones. This means:

You can use tax credits to pay the income tax bill for your whole group in a tax year.

When there’s a limit or threshold in the law, it applies to your whole group as one, not to each company separately.

The consolidation rules include different parts of the law. These are:

This part of the law you’re reading now.

Section GB 38, which talks about when sections GB 35 to GB 37 apply to consolidated groups.

Subpart ID, which is about how consolidated groups use tax losses.

Sections LK 8 to LK 11, which deal with tax credits for companies in a consolidated group.

Subpart OP, which covers memorandum accounts of consolidated groups.

Section RC 28, which explains provisional tax rules for consolidated groups.

Section 74 of the Tax Administration Act 1994, which is part of a different law but still applies to consolidated groups.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516627.

Topics:

Money and consumer rights > Taxes

FM 1: What this subpart applies to, or

“This subpart covers rules for eligible companies to form consolidated groups for tax purposes”

FM 3: Liability of consolidated groups and group companies, or

“Group companies share tax responsibilities and reporting”

Part F Recharacterisation of certain transactions
Consolidated groups of companies

FM 2Consolidation rules

The consolidation rules are intended to ensure that, unless a provision of this Act expressly provides otherwise or the context requires another result, this Act applies to companies that are part of a consolidated group as if they were a single company, including its treatment for the following purposes:
to determine whether a tax credit may be used to satisfy the income tax liability of a consolidated group for a tax year:
when a provision sets a limit or provides a threshold, and its application depends on whether or not something is more or less than the limit or threshold.

The consolidation rules means the following:
this subpart:
section GB 38 (When sections GB 35 to GB 37 apply to consolidated groups):
subpart ID (Use of tax losses by consolidated groups):
sections LK 8 to LK 11 (which relate to tax credits of consolidated group companies):
subpart OP (Memorandum accounts of consolidated groups):
section RC 28 (Provisional tax rules and consolidated groups):
section 74 of the Tax Administration Act 1994.

Compare

2004 No 35 ss FD 1, OB 1 consolidation rules

Notes

Section FM 2(2)(g): substituted (with effect on 30 June 2009), on 6 October 2009, by section 229(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).