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Income Tax Act 2007

Recharacterisation of certain transactions - Consolidated groups of companies - When membership starts and stops

FM 39: Choosing to leave consolidated group

You could also call this:

“How to choose to leave a consolidated group for tax purposes”

When you’re part of a consolidated group, you can choose to leave it. You need to tell the Commissioner about your decision.

You can pick when you want to leave. You can leave right away, or you can wait until the start of the next income year. If you don’t say when you want to leave, the law assumes you left at the start of the income year when you told the Commissioner.

If you join and leave a consolidated group in the same income year, things work a bit differently. If you say you want to wait to leave, you’ll be treated as leaving at the start of the next income year after you told the Commissioner. But sections FM 40 and FM 41 might change this rule.

If you join and leave in the same income year and don’t say you want to wait, you’ll be treated as if you left on the day you joined the group.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516736.

Topics:

Money and consumer rights > Taxes

FM 38: Notice requirements on forming or joining consolidated group, or

“Notice rules for companies forming or joining tax groups”

FM 40: Losing eligibility to be part of consolidated group, or

“When a company becomes ineligible to be part of a consolidated group”

Part F Recharacterisation of certain transactions
Consolidated groups of companies: When membership starts and stops

FM 39Choosing to leave consolidated group

This section applies when a company chooses to leave a consolidated group and notifies the Commissioner of its election.
When the company notifies the Commissioner of its election, it may defer the date on which it leaves the consolidated group to the first day of the next income year. However, unless subsections (3) and (4) apply, if the company does not defer the leaving date, it is treated as no longer in the consolidated group from the start of the income year in which the Commissioner receives the notice.
Despite subsection (2), if a company leaves a consolidated group in the same income year in which it joins the group, and defers the leaving date in the notice, it is treated as leaving the consolidated group from the start of the income year after the income year in which the Commissioner receives the notice. Sections FM 40 and FM 41 override this subsection.
Despite subsection (2), if a company leaves a consolidated group in the same income year in which it joins the consolidated group, and does not defer the leaving date in the notice, it is treated as leaving the consolidated group on the date it joined the group.

Compare

2004 No 35 s FD 8(2)

Notes

Section FM 39(3): amended (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 140(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).