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Income Tax Act 2007

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

FM 14: Part-year financial statements

You could also call this:

“How to prepare financial statements for parts of a tax year when companies join or leave tax groups”

You need to know about part-year financial statements in some special cases. This applies when a company joins or leaves a group of companies that are treated as one for tax purposes, or when such a group is formed or ends during a tax year.

In these situations, you need to include special financial statements with your tax return. These statements cover only part of the year. You need to do this if you’re the company that joined or left the group, if you’re the group that the company joined or left, or if you’re another group that the company was part of during that year.

These part-year statements need to show the company’s income, deductions, tax, or losses in a fair way. Even though they only cover part of the year, you treat that part as if it were a full year for these purposes.

You can find more details about these statements in sections FM 38(5) and FM 40(4) 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=DLM1516654.

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

FM 14Part-year financial statements

  1. This section applies in an income year when—

  2. a company joins or leaves a consolidated group during the income year; or
    1. a consolidated group is formed or ends its existence during the income year.

      1. The following returns of income for the tax year must include part-year financial statements under sections FM 38(5) and FM 40(4):

      2. by the company when the financial statements relate to a period in which the company is not in the consolidated group:
        1. by the consolidated group when the financial statements relate to a period in which the company is in the consolidated group:
          1. by another consolidated group when the financial statements relate to a period in which the company is in another consolidated group.

            1. The part-year financial statements must determine, as applicable, the annual gross income, annual total deductions, income tax liability, or tax loss of the company in a fair and reasonable way. For this purpose the relevant part of the income year is treated as a complete income year.

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