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Income Tax Act 2007

Treatment of tax losses - General rules for tax losses

IA 10: Amended assessments

You could also call this:

“How changing past tax assessments affects your tax losses”

If the Commissioner changes your tax assessment for a past year, it might affect your tax losses. This can happen anytime during the current tax year.

If the change reduces your tax losses, you need to lower your loss balance or ring-fenced tax loss for that earlier year. You also need to adjust any uses of those losses in other tax years.

If the change increases your tax losses, you need to add to your loss balance or ring-fenced tax loss for that earlier year.

These changes happen when the Commissioner uses section 113 of the Tax Administration Act 1994 to amend your assessment.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517713.

Topics:
Money and consumer rights > Taxes
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“Rules for using tax loss components in order”

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“This provision explains why companies can carry forward tax losses to support growth and adaptation”

Part I Treatment of tax losses
General rules for tax losses

IA 10Amended assessments

  1. This section applies if, in a tax year, the Commissioner amends under section 113 of the Tax Administration Act 1994 a person’s assessment for an earlier tax year, and the amendment adjusts the amount of a tax loss component or a ring-fenced tax loss for the earlier tax year.

  2. If the amount is reduced in the adjustment, the person must reduce their loss balance or ring-fenced tax loss for the earlier tax year by the amount of the adjustment. If the loss balance or ring-fenced tax loss has been used in earlier tax years, they must similarly apply the reduction to the use of the loss balance or ring-fenced tax loss.

  3. If the amount is increased in the adjustment, the person must add an amount to their loss balance or ring-fenced tax loss for the earlier tax year.