Income Tax Act 2007

Treatment of tax losses - Attributed controlled foreign company net losses and foreign investment fund net losses

IQ 6: Pre-consolidation losses: general treatment

You could also call this:

"How companies use old losses to reduce their income"

You have a company in a group and it has a loss from before the group was formed. This loss can be used to reduce the group's income for the year. The loss can only be used to reduce income from the same type of investment that the loss came from. You can use the loss to reduce the group's income for the year. If there is some loss left over, the company can use it to reduce its own income. It can also give the leftover loss to another group to use, or use it in another way. The rules for using the loss are in section IQ 1B and other sections like section IQ 4, IQ 5, and section IC 5.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517814.

This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > TaxesBusiness > Industry rules

IQ 5: Group companies using FIF net losses, or

"Removal of rule for group companies sharing foreign investment fund losses"

IQ 7: When group membership lacking in loss period, or

"What happens when a company in a group wasn't part of the group when it made a loss"

Part ITreatment of tax losses
Attributed controlled foreign company net losses and foreign investment fund net losses

IQ 6Pre-consolidation losses: general treatment

This section applies if a company that is part of a consolidated group has under section IQ 1B an attributed CFC net loss or FIF net loss carried forward to a tax year.
The first use of the amount must be by the company under subsection (3) or (4) in making the amount available to the consolidated group to subtract from its net income, so far as it extends, for the tax year.
If the amount is an attributed CFC net loss, it may be used only to the extent to which it is no more than the attributed CFC income that the consolidated group derives in the tax year from a CFC resident in the country in which the loss arose.
If the amount is a FIF net loss, it may be used only to the extent to which it is no more than the FIF income that the consolidated group derives in the tax year from a FIF resident in the country in which the loss arose.
If, after applying subsection (2), some of the amount remains, the company may—
subtract the remaining amount from its net income for the tax year; or
make the remaining amount available to another consolidated group to subtract from its net income for the tax year under section IQ 4 or IQ 5; or
make the remaining amount available under section IC 5 (Company B using company A’s tax loss).

Compare

2004 No 35 s IG 7(2)

Notes

Section IQ 6(1): amended (with effect on 1 April 2008), on 7 December 2009, by section 65(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).