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Income Tax Act 2007

Treatment of tax losses - Cancellation of life insurer's losses

IT 1: Cancellation of life insurer's policyholder net losses

You could also call this:

“Cancelling old tax losses for life insurance companies”

If you are a life insurer, this law affects some of your tax losses from before 1 July 2010. These specific losses are called “policyholder net losses”. Here’s what happens to them:

The government will cancel these old policyholder net losses. This means you can’t use them to reduce your taxes after 1 July 2010. The cancelled amount is taken away from your available tax losses for the tax year that includes 1 July 2010.

You can’t use these cancelled losses to lower your net income for tax purposes, except in some special cases during the first part of the tax year. These special cases are explained in section EY 5(2).

From 1 July 2010 onwards, these cancelled losses are not considered part of your tax loss components anymore. They are completely cancelled and you can’t use them for anything related to your taxes.

This law is part of some big changes the government made to how life insurance companies are taxed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517837.

Topics:
Money and consumer rights > Taxes
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IT 2: Cancellation of life insurer's tax loss when allowed into policyholder base, or

“Life insurer's tax loss cancelled when used as policyholder base deduction”

Part I Treatment of tax losses
Cancellation of life insurer's losses

IT 1Cancellation of life insurer's policyholder net losses

  1. This section applies to the amount of a life insurer's tax loss to be carried forward to the tax year corresponding to the income year that includes 1 July 2010 (the tax year), to the extent to which the amount (the cancelled amount) would be a ring-fenced tax loss for policyholder net losses under section IA 7(3) (Restrictions relating to ring-fenced losses) if the enactment of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 were ignored.

  2. The cancelled amount—

  3. is removed from the life insurer's available tax loss for the tax year, except as provided by section EY 5(2) (Part-year tax calculations) for the first part-year; and
    1. must not be subtracted from the life insurer's net income under section BC 5 (Taxable income) for the tax year, except as provided by section EY 5(2) for the first part-year; and
      1. is not a tax loss component on and after 1 July 2010; and
        1. is cancelled on and after 1 July 2010.

          Notes
          • Section IT 1: substituted, on , by section 307(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).