FM 15Amortising property and revenue account property

1. This section applies—

2. when property is transferred from a company (company A) to another company (company B) and both companies are in the same consolidated group at the time the transfer takes place, and the property transferred is—
   1. amortising property; or
   2. revenue account property, but not trading stock or a financial arrangement to which the financial arrangements rules apply; and
3. to determine the income and deductions on a later disposal of property, or in relation to the depreciation or amortisation of the acquisition cost of the property under this Act.

4. Company B is treated as acquiring the property on the date it was acquired by company A for the amount set out in subsections (3) to (5).

5. For the purposes of sections CB 6A and CZ 39 (which relate to residential land), in relation to property that is land, company B is treated as having the same bright-line acquisition date as company A for that land.

6. When the property forms the whole of a pool of property that is depreciated by company A under sections EE 20 to EE 24 (which relate to depreciation loss calculated under the pool method), the amount in subsection (2) is the adjusted tax value of the pool immediately before the property is transferred to company B.

7. When the property forms only part of a pool of property that is depreciated by company A under sections EE 20 to EE 24, the amount in subsection (2) is the lesser of—

8. the market value of the property transferred to company B; and
9. the adjusted tax value of the whole of the pool immediately before the property is transferred to company B.

10. If subsections (3) and (4) do not apply, the amount in subsection (2) is the sum of the following amounts of expenditure incurred by company A before the property is transferred to company B for which no deduction has been allowed other than by the depreciation or amortisation of the acquisition cost of the property under section EE 1, EZ 7, or EZ 8 (which relate to depreciation), or another amortisation provision of this Act:

11. the original acquisition cost of the property:
12. expenditure incurred—
    1. in acquiring or improving the property; or
    2. in securing or improving company A’s legal rights to the property.

13. Subsection (7) applies—

14. for the purposes of sections EE 46 to EE 52 (which relate to disposals and depreciation recovery income); and
15. to property referred to in subsection (1)(b) other than pooled property; and
16. in relation to an amount of depreciation loss or amortisation of acquisition cost up to the time the property is transferred from company A to company B.

17. Company B is treated as allowed the pre-transfer deductions that company A is allowed for amounts of depreciation loss under section EZ 7 or EZ 8, or for an amount of expenditure or loss under another amortisation provision of this Act.

18. Subsections (1) to (7) do not apply to Kāinga Ora–Homes and Communities or a company in the same consolidated group as Kāinga Ora–Homes and Communities.