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Income Tax Act 2007

Avoidance and non-market transactions - Avoidance: specific

GB 4: Arrangements for grouping tax losses: companies

You could also call this:

“Rules for companies sharing tax losses within a group”

This law is about companies trying to use tax losses in a way that’s not allowed. You need to know about something called an offset company. This is a company that wants to use tax losses from other companies in its group.

The law says there’s a problem if someone does something tricky with the shares of the offset company or another company. This tricky thing might change how the shares work. If this trick helps the offset company meet certain rules about using group tax losses, and that’s what the person wanted to do, then the law steps in.

If this happens, the law says the offset company can’t use those rules about group tax losses for those shares. The rules it can’t use are in parts of the law called subparts IC and IP, and sections IZ 7 and IZ 8.

So, if a company tries to be clever with its shares just to use tax losses it shouldn’t, the law stops it from doing that.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516880.

Topics:
Money and consumer rights > Taxes
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Part G Avoidance and non-market transactions
Avoidance: specific

GB 4Arrangements for grouping tax losses: companies

  1. This section applies when—

  2. a share in a company (the offset company) or another company has been subject to an arrangement, including an arrangement directly or indirectly altering rights attached to the shares; and
    1. the arrangement allows the offset company to meet the requirements of subparts IC and IP, and sections IZ 7 and IZ 8 (which relate to the use of tax losses by group companies), as applicable; and
      1. a purpose of the arrangement is to defeat the intent and application of those provisions.

        1. The offset company is treated as not meeting the requirements of subparts IC and IP and section IZ 7 or IZ 8, as applicable, in relation to the share.

        Compare
        Notes
        • Section GB 4(1)(b): amended (with effect on 15 April 2020), on , by section 8(1) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).
        • Section GB 4(2): amended (with effect on 15 April 2020), on , by section 8(2) of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).