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Income Tax Act 2007

Tax credits and other credits - Tax credits relating to attributed controlled foreign company income

LK 5: Companies’ credits carried forward

You could also call this:

“How companies can carry forward unused tax credits to future years”

You can carry forward a tax credit to a later tax year if it meets certain conditions. These conditions are the same as those that apply to carrying forward tax losses. The tax credit is treated as if it were a tax loss that happened on the last day of the income year for the tax year when you got the credit.

To figure out if you can carry the credit forward, you need to look at sections IA 2 to IA 10 and subpart IB of the Income Tax Act. These parts of the law explain how to treat tax losses and how to carry forward companies’ loss balances when they keep doing the same business activities.

If these rules would allow you to carry forward a tax loss, then you can also carry forward your tax credit in the same way.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518149.

Topics:
Money and consumer rights > Taxes
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LK 4: Use of remaining credits, or

“How to use leftover tax credits in future years”

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LK 5B: Credits from tax year before first affected year, or

“How to use tax credits from previous years for foreign investments”

Part L Tax credits and other credits
Tax credits relating to attributed controlled foreign company income

LK 5Companies’ credits carried forward

  1. A tax credit carried forward under section LK 4 may be carried forward to a later tax year only if, by treating the credit as a tax loss component to which sections IA 2 to IA 10 (which relate to the treatment of tax losses) and subpart IB (Carrying forward companies’ loss balances: continuity of business activities) apply, those sections would allow the amount to be carried forward.

  2. For the purposes of this section, the credit is treated as a tax loss component arising on the last day of the income year corresponding to the tax year for which the person has the credit.

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Notes
  • Section LK 5(1): amended (with effect on 1 April 2020), on , by section 116 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).