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Income Tax Act 2007

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

IE 5: Applying the continuity provisions when companies amalgamate

You could also call this:

“What happens to tax when companies merge in New Zealand”

When companies amalgamate, the law applies as if the new company was always there. You treat the new company as if it was the old companies with the same shareholders and shares. This helps decide if a tax loss can be used or carried forward under sections like IA 3 and IA 4.

The law also applies when a company wants to use another company’s loss, including foreign losses, under section IC 5 or IQ 4. You can subtract the loss from the new company’s income if it is a group company. This is also under section IC 5 or IQ 4.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517773.

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

IE 5Applying the continuity provisions when companies amalgamate

  1. The provisions of this Act apply as if the amalgamated company did not exist separately before amalgamation, and was instead the amalgamating companies with the same holders of shares and options over shares, each with the same number and class of shares and options over shares, as they held in the amalgamating company, to determine whether a tax loss or loss balance,—

  2. may be used or is carried forward under sections IA 3 and IA 4 (which relate to the general use of tax losses):
    1. may be subtracted from the net income of another company under section IC 5 or IQ 4 (which relate to a company’s use of another company’s loss, including foreign losses):
      1. in the case of a group company, may be subtracted from the net income of the amalgamated company under section IC 5 or IQ 4.

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        Notes
        • Section IE 5(b): amended, on , by section 100 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).
        • Section IE 5(c): amended, on , by section 100 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).