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Income Tax Act 2007

Treatment of tax losses - Grouping tax losses

IC 2: Threshold levels for grouping tax losses in tax year

You could also call this:

“Rules for sharing tax losses between connected companies in a year”

You can group tax losses in a tax year if you meet certain rules. First, you need to follow the rules about carrying forward tax losses for companies. These rules are explained in other parts of the law.

You also need to have common ownership with another company. This means that both companies must be owned by the same people or groups for a specific time period. The law explains how long this shared ownership needs to last.

Sometimes, you might only own the company for part of the year. In this case, there are special rules you need to follow. These rules make sure that you still owned enough of the company during that time to group the tax losses.

Remember, these rules are quite complex. If you’re not sure about them, it’s a good idea to ask for help from someone who knows a lot about tax laws.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517721.

Topics:
Money and consumer rights > Taxes
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IC 1: Company A making tax loss available to company B, or

“Sharing tax losses between companies in the same group”

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IC 3: Common ownership: group of companies, or

“When companies are considered a group due to shared ownership”

Part I Treatment of tax losses
Grouping tax losses

IC 2Threshold levels for grouping tax losses in tax year

  1. Company A may group a tax loss in a tax year under section IC 5 only if the requirements of section IA 5(2) and (3) or IB 3(2) (which relate to the carrying forward of tax losses for companies) are met.

  2. In addition to meeting the requirements referred to in subsection (1), company A and company B must have the required common ownership under section IC 3 for the period referred to in section IC 6.

  3. Subpart IP (Meeting requirements for part-years) applies in a tax year that is part of the commonality period if the following requirements are met for the relevant part-year:

  4. continuity of ownership in company A for the purposes of subsection (1); and
    1. common ownership of company A and company B for the purposes of subsection (2).

      Compare
      Notes
      • Section IC 2(1) heading: amended (with effect on 1 April 2020), on , by section 100(1) (and see section 100(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
      • Section IC 2(1): amended (with effect on 1 April 2020), on , by section 100(2) (and see section 100(3) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).