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Income Tax Act 2007

Recharacterisation of certain transactions - Consolidated groups of companies - Accounting generally

FM 9: Amounts that are company’s income

You could also call this:

“Money that counts as income for companies in a consolidated group”

When you’re part of a group of companies called a consolidated group, you might get money that wouldn’t normally be your company’s income. But it would be income for the whole group if it was just one big company. This can happen for a few reasons:

  1. Because of why you bought something
  2. Because the money is connected to another company in your group doing business
  3. For some other reason

If this happens, that money becomes your company’s income under section CV 2 of the law.

But there are some exceptions to this rule. If your company is linked to a local council or is in the same group as Kāinga Ora-Homes and Communities, different rules might apply. These are explained in sections CB 15C(2) and CB 15D(2) of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516644.

Topics:
Money and consumer rights > Taxes
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Part F Recharacterisation of certain transactions
Consolidated groups of companies: Accounting generally

FM 9Amounts that are company’s income

  1. This section applies when a company that is part of a consolidated group derives an amount that would not be income of the company in the absence of this section, but would be income of the consolidated group if it were 1 company either—

  2. because of a purpose for which an item of property was acquired; or
    1. because a connection exists between the amount and the carrying on of a business by another consolidated group company; or
      1. for some other reason.

        1. The amount is income of the company under section CV 2 (Consolidated groups: income of company in group).

        2. This section is overridden by sections CB 15C(2) and CB 15D(2) (which apply to bodies linked or associated with a local authority or companies in the same wholly-owned group as Kāinga Ora–Homes and Communities).

        Compare
        Notes
        • Section FM 9(3) heading: replaced (with effect on 1 July 2017), on , by section 201 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
        • Section FM 9(3): replaced (with effect on 1 July 2017), on , by section 201 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
        • Section FM 9(3): amended (with effect on 1 October 2019), on , by section 190 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).