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Income Tax Act 2007

Treatment of tax losses - Terminating provisions

IZ 7: Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92

You could also call this:

“Rules for sharing tax losses between companies from 1981 to 1992”

You can group tax losses between companies in certain situations. If a company (let’s call it Company A) had a tax loss between 1981 and 1992, it can share that loss with another company (Company B) in a later year. But Company B must have been in the same group as Company A in the earlier year when the loss happened.

For tax losses that happened before 1981, Company A can share its loss with Company B in a later year. In this case, Company B needs to be in the same group as Company A in the year when they want to use the loss.

Sometimes, the companies might have different balance dates. If Company B’s balance date is later than Company A’s, the tax year can be extended to make sure they match up.

For tax losses that happened before 1992, there are some extra rules. Company A needs to be set up in New Zealand or doing business here through a fixed place. It also needs to live in New Zealand for tax purposes and not be treated as living somewhere else under tax agreements with other countries.

These rules are very important and they change some of the usual rules about how companies can group their tax losses.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517889.

Topics:
Money and consumer rights > Taxes
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IZ 6: Companies’ tax losses for 1990–91 and 1991–92 tax years, or

“How companies can use certain tax losses from 1990-1992”

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IZ 7B: Grouping tax losses for commonality periods starting before 15 March 2017 for tax years after 1990–91, or

“Rules for sharing company tax losses from before March 2017”

Part I Treatment of tax losses
Terminating provisions

IZ 7Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92

  1. For the purposes of section IC 5(1)(a) (Company B using company A’s tax loss), if company A has a tax loss in a tax year between the 1981–82 and 1991–92 tax years, company A and company B may group the tax loss in a tax year that is later than the tax year in which the tax loss component arises only if company B is in the same group of companies as company A in the earlier tax year.

  2. For the purposes of section IC 5(1)(a), if company A has a tax loss in a tax year before the 1981–82 tax year, company A and company B may group the tax loss in a tax year that is later than the tax year in which the tax loss component arises only if company B is in the same group of companies as company A in the tax year in which the tax loss is used.

  3. For the purposes of subsections (1) and (2), the tax year is extended under section IC 10(2)(b) (When companies have different balance dates) if company B’s balance date is later than company A’s balance date.

  4. For the purposes of section IC 5(1)(b), if company A’s tax loss component arose in a tax year before the 1991–92 tax year, company A and company B may group the tax loss component in a tax year that is later than the tax year first referred to only if company A is, in both the earlier and the later tax year—

  5. incorporated in New Zealand, or carrying on a business in New Zealand through a fixed establishment in New Zealand; and
    1. resident in New Zealand, and not treated under a double tax agreement, and for the purposes of the agreement, as not resident in New Zealand, or liable by the law of another country or territory to income tax in that country or territory through domicile, residence, or place of incorporation.

      1. Subsections (1) and (2) override sections IC 5(1)(a) and IC 6 (which relate to grouping requirements) and subsection (4) overrides sections IC 5(1)(b) and IC 6.

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