Income Tax Act 2007

Treatment of tax losses - Treatment of tax losses on amalgamation of companies

IE 4: Group companies’ treatment of tax losses on amalgamation

You could also call this:

"What happens to tax losses when companies merge in New Zealand?"

When companies amalgamate, you need to know how tax losses are treated. If a company in a group meets certain requirements, such as those in section IA 5(2) and (3) or IB 3(2), and has a tax loss before amalgamation, it can use this loss. The company can use the tax loss under section IC 5 or IQ 4.

You can subtract the tax loss from the net income of the amalgamated company for the tax year if all companies involved meet the requirements of subparts IA, IC, and IQ. These subparts relate to the general loss rules and certain foreign losses that allow companies to group tax losses. This means the companies must follow these rules to use the tax losses.

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This page was last updated on 20 May 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517771.

IE 3: Treatment of tax losses by amalgamated company, or

"How a new company can use tax losses from companies that joined together"

IE 5: Applying the continuity provisions when companies amalgamate, or

"What happens to tax when companies merge in New Zealand"

Part ITreatment of tax losses
Treatment of tax losses on amalgamation of companies

IE 4Group companies’ treatment of tax losses on amalgamation

This section applies on an amalgamation if a company that is part of a group of companies—
meets the requirements of section IA 5(2) and (3) or IB 3(2) (which relate to the carrying forward of tax losses for companies); and
has a tax loss for part of a tax year before the date of amalgamation; and
may use the tax loss under section IC 5 or IQ 4 (which relate to a company’s use of another company’s loss, including foreign losses).

The amount of the tax loss may be subtracted from the net income of the amalgamated company for the tax year only if both the company and the amalgamated company, and each company that before or during the amalgamation amalgamated with the amalgamated company, meet the requirements of subparts IA, IC, and IQ (which relate to the general loss rules and certain foreign losses) that allow companies to group tax losses.

Compare

2004 No 35 s IG 9

Notes

Section IE 4(1)(a): amended (with effect on 1 April 2020), on 30 March 2021, by section 108(1) (and see section 108(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
Section IE 4(1)(c): amended, on 30 March 2025, by section 99 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).