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New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Qualifying companies (QC)

HA 22: Group companies using tax losses

You could also call this:

“How qualifying companies can share tax losses within a group”

This law is about how companies can share their tax losses. If you’re a qualifying company, you might be able to use the tax losses of another company in your group. However, there are some rules you need to follow.

You can only use the other company’s tax losses if that company is also a qualifying company. This means both companies need to meet certain requirements.

Also, you need to follow the rules in section IC 5. This section explains how one company can use another company’s tax losses.

Remember, you can only use these tax losses as described in section IA 3(2). This section talks about how you can use tax losses in a tax year.

So, if you’re a qualifying company and you want to use another company’s tax losses, make sure both companies are qualifying companies and that you follow all the rules.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517184.

Topics:
Money and consumer rights > Taxes
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HA 21: Loss balances not carried forward, or

“Loss balances from previous years can't be used when a company becomes a qualifying company”

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HA 23: Treatment of tax losses on amalgamation, or

“Tax losses can't be carried forward when non-qualifying companies merge with qualifying companies”

Part H Taxation of certain entities
Qualifying companies (QC)

HA 22Group companies using tax losses

  1. This section applies if a qualifying company is in the same group of companies as a company with a tax loss (company A).

  2. The amount of company A’s tax loss is available to the qualifying company to use under section IA 3(2) (Using tax losses in tax year) only if—

  3. company A is also a qualifying company; and
    1. the requirements of section IC 5 (Company B using company A’s tax loss) are met.

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