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IC 5: Company B using company A’s tax loss
or “Requirements for one company to use another company's tax loss”
You could also call this:

“Companies must share ownership for a set time to use each other's tax losses”

When a company wants to use another company’s tax losses, they need to have common ownership for a specific period. This period is called the commonality period. It starts at the beginning of the income year when the first company has a tax loss and ends when the second company uses that loss to reduce its own income.

This rule applies to each tax loss separately as they happen in each income year. If the two companies have different balance dates, the commonality period might need to be extended.

For tax losses from before 1981-82 and between 1981-82 and 1991-92, there are special rules that override the normal commonality period rules.

You can find more information about the requirements for common ownership in section IC 3, and about how different balance dates affect the commonality period in section IC 10(2)(b).

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Next up: IC 7: Place of incorporation or carrying on business

or “Company must be incorporated or operate in New Zealand”
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Part I Treatment of tax losses
Grouping tax losses

IC 6Common ownership for period

  1. For the purposes of section IC 2(2), common ownership under section IC 3 must exist from the start of the income year in which company A has a tax loss component that is included in the tax loss to the end of the income year in which company B subtracts the amount of the tax loss component from its net income. In this Part, this length of time is called the commonality period.

  2. The requirement set out in subsection (1) applies to net losses as they arise in an income year on an individual basis.

  3. If the balance dates of company A and company B are different, section IC 10(2)(b) applies to extend the commonality period.

  4. Section IZ 7(1) and (2)(Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92) overrides subsections (1) and (2).

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