Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Recharacterisation of certain transactions - Amalgamation of companies

FO 14: Financial arrangements: resident’s restricted amalgamation, other cases

You could also call this:

“Rules for financial deals when companies merge in specific ways”

When a company joins with another company in a special way called a resident’s restricted amalgamation, sometimes the joining company has financial arrangements. These are special kinds of money deals. If the rules in sections FO 12 and FO 13 don’t apply, here’s what happens:

The company that’s joining is treated as if it sold its financial arrangement. The price it gets for this pretend sale is whatever the financial arrangement is worth on the day the new, combined company gets it. This is called the market value.

This rule applies in the year when the financial arrangement moves from the joining company to the new, combined company.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516809.

Topics:
Business > Industry rules
Money and consumer rights > Taxes
Previous

FO 13: Financial arrangements: resident’s restricted amalgamation, calculation method unchanged, or

“How financial arrangements are treated when companies merge without changing calculation methods”

Next

FO 15: Financial arrangements: amalgamation other than resident’s restricted amalgamation, or

“Rules for financial agreements when companies merge, except for specific resident mergers”

Part F Recharacterisation of certain transactions
Amalgamation of companies

FO 14Financial arrangements: resident’s restricted amalgamation, other cases

  1. This section applies in an income year in which a financial arrangement belonging to an amalgamating company passes to the amalgamated company on a resident’s restricted amalgamation when sections FO 12 and FO 13 do not apply.

  2. The amalgamating company is treated as having disposed of the financial arrangement. The consideration for the disposal is the market value of the financial arrangement on the date the amalgamated company acquires it.

Compare