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Income Tax Act 2007

Treatment of tax losses - General rules for tax losses

IA 8: Restrictions relating to schedular income

You could also call this:

“Rules for using tax losses when calculating schedular income tax”

When you’re calculating your schedular income tax liability for a tax year, you can’t use a tax loss for certain types of income. These types include:

  • Income from life insurance policies
  • Some income earned by non-residents
  • Income earned by non-resident shippers
  • Income earned by non-resident general insurers
  • Income related to companies carrying forward loss balances

If you’re part of a group of companies, you can’t use another company’s tax loss in your group to lower your schedular income tax liability for the tax year.

These rules are more important than some other rules about using tax losses. If you want to know more about those other rules, you can look at sections IA 3 to IA 7.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517708.

Topics:
Money and consumer rights > Taxes
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IA 7: Restrictions relating to ring-fenced tax losses, or

“Special rules limit the use of certain types of tax losses”

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IA 9: Ordering rules, or

“Rules for using tax loss components in order”

Part I Treatment of tax losses
General rules for tax losses

IA 8Restrictions relating to schedular income

  1. For the purposes of section BC 7 (Income tax liability of person with schedular income), a person must not take a tax loss into account in calculating a schedular income tax liability for a tax year for income described in the following paragraphs of the definition of schedular income:

  2. paragraph (a), which relates to life insurers' schedular policyholder base income; or
      1. paragraph (f), for non-resident passive income described in section RB 3 (Schedular income tax liability for filing taxpayers for non-resident passive income); or
        1. paragraph (g), which relates to non-resident shippers; or
            1. paragraph (i), which relates to non-resident general insurers; or
              1. paragraph (k), which relates to companies carrying forward loss balances.

                1. For the purposes of subsection (1), a company that is part of a group of companies must not take a tax loss of another company in the same group into account under section IC 5 or ID 2 (which relate to companies’ use of tax losses) in calculating a schedular income tax liability for the tax year.

                2. This section overrides sections IA 3 to IA 7.

                Compare
                Notes
                • Section IA 8(1)(aa): inserted, on , by section 297(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section IA 8(1)(a): repealed (with effect on 1 April 2008), on , by section 297(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section IA 8(1)(d): repealed, on , by section 113 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section IA 8(1)(e): amended (with effect on 1 April 2020), on , by section 98(1) (and see section 98(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                • Section IA 8(1)(f): inserted (with effect on 1 April 2020), on , by section 98(2) (and see section 98(4) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                • Section IA 8 list of defined terms loss balance: inserted (with effect on 1 April 2020), on , by section 98(3) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                • Section IA 8 list of defined terms non-resident entertainer: repealed, on (with effect on 1 April 2008), by section 144 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section IA 8 list of defined terms schedular policyholder base income: inserted, on , by section 297(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).