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IC 2: Threshold levels for grouping tax losses in tax year
or “Rules for sharing tax losses between connected companies in a year”
You could also call this:

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

A group of companies is made up of two or more companies where a group of people holds at least 66% of the common voting interests. If a market value circumstance exists for a company in the group, the group of people must also hold at least 66% of the common market value interests.

You’re considered part of a group of companies if these minimum common interests exist at a specific time or are maintained for a whole period. The group of people holding the interests doesn’t need to stay the same for the entire period.

A mixed-ownership enterprise can only be in a group of companies if no other company in the group is a mixed-ownership enterprise.

For companies including a multi-rate PIE, they’re treated as a group if the PIE owns 100% of the voting interests in the other companies, and the other companies are multi-rate PIEs, land investment companies, certain subsidiary companies, or foreign PIE equivalents.

For companies including a listed PIE, they’re treated as a group if the PIE owns 100% of the voting interests in the other companies.

A multi-rate PIE that chooses to become a foreign investment PIE can’t be part of a group of companies that includes a land investment company.

When measuring a person’s common voting interest or common market value interest in multiple companies, you use the same percentage if it’s the same for all companies, or the lowest percentage if they differ between companies.

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Next up: IC 4: Common ownership: wholly-owned groups of companies

or “Companies that are fully owned by the same group of people”
Next

Part I Treatment of tax losses
Grouping tax losses

IC 3Common ownership: group of companies

  1. A group of companies means 2 or more companies, none of which is a multi-rate PIE or a listed PIE, in relation to which a group of persons holds—

  2. common voting interests that add up to at least 66%; and
    1. if a market value circumstance exists for a company that is part of a group of companies, common market value interests that add up to at least 66%.

      1. A company is treated as part of a group of companies at a particular time or for a particular period if the minimum common interests referred to in subsection (1) exist at the relevant time or are kept for the whole of the relevant period. But it is not necessary that the group of persons holding the interests stays the same for the whole of the relevant period.

      2. A mixed-ownership enterprise may be included in a group of companies only if, at the particular time or for the particular period, no other company in the group is a mixed-ownership enterprise.

      3. In relation to 2 or more companies of which 1 is a multi-rate PIE, the companies are treated as a group of companies at a particular time or for a particular period if—

      4. the PIE owns 100% of the voting interests in the other companies; and
        1. the other companies in the group are—
          1. multi-rate PIEs:
            1. land investment companies:
              1. subsidiary companies that meet the requirements of section HM 7(a) and (d) (Requirements):
                1. foreign PIE equivalents.

                2. In relation to 2 or more companies of which 1 is a listed PIE, the companies are treated as a group of companies at a particular time or for a particular period if the PIE owns 100% of the voting interests in the other companies.

                3. For the purposes of subsection (2B)(b), a multi-rate PIE that chooses under section HM 71B (Choosing to become foreign investment PIE) to become a foreign investment PIE, must not be part of a group of companies that includes a land investment company.

                4. In subsection (1)(a) and section IC 4(1)(a), a person’s common voting interest in the relevant companies at a particular time is the percentage of their voting interests under sections YC 2, YC 4(1) to (3), YC 5, and YC 6 (which relate to voting interests) in each of the companies at the time.

                5. In subsection (1)(b), a person's common market value interest in the relevant companies at a particular time is the percentage of their market value interests under sections YC 3, YC 4(1) to (3), YC 5, and YC 6 (which relate to market value interests) in each of the companies at the time.

                6. For the purposes of this section, in measuring a person's common voting interest or common market value interest in 2 or more companies at a particular time,—

                7. for percentages that are the same in relation to each company, the person's percentage interest at the time:
                  1. for percentages that differ as between the companies, the lowest percentage interest in each company at the time.

                    Compare
                    Notes
                    • Section IC 3(1): amended, on , by section 90(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(1): amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 105(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                    • Section IC 3(2A) heading: inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
                    • Section IC 3(2A): inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
                    • Section IC 3(2B) heading: substituted, on (applying for the 2010–11 and later income years), by section 298(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3(2B): substituted, on (applying for the 2010–11 and later income years), by section 298(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3(2B)(b): substituted, on , by section 90(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(2C) heading: inserted, on , by section 90(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(2C): inserted, on , by section 90(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(2D) heading: inserted, on , by section 90(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(2D): inserted, on , by section 90(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3(3) heading: substituted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 82(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section IC 3(3): replaced, on (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 146(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                    • Section IC 3(4) heading: substituted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 82(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section IC 3(4): substituted (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 82(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section IC 3(4): amended, on (with effect on 1 April 2008), by section 146(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                    • Section IC 3(5) heading: added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 82(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section IC 3(5): added (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 82(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
                    • Section IC 3 list of defined terms foreign investment PIE: inserted, on , by section 90(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3 list of defined terms foreign PIE equivalent: inserted, on , by section 90(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3 list of defined terms land investment company: inserted, on , by section 298(3)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3 list of defined terms listed PIE: inserted, on , by section 90(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                    • Section IC 3 list of defined terms mixed-ownership enterprise: inserted, on , by section 11 of the Public Finance (Mixed Ownership Model) Amendment Act 2012 (2012 No 45).
                    • Section IC 3 list of defined terms multi-rate PIE: inserted, on , by section 298(3)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3 list of defined terms portfolio land company: repealed, on , by section 298(3)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3 list of defined terms portfolio land company: inserted, on , by section 432(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                    • Section IC 3 list of defined terms portfolio tax rate entity: repealed, on , by section 298(3)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section IC 3 list of defined terms voting interest: inserted, on , by section 298(3)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).