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Income Tax Act 2007

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

LK 14: Use by amalgamated company of credits carried forward

You could also call this:

“Merged companies can use leftover tax credits from before joining”

When a company joins with another company, it’s called an amalgamation. If you have a tax credit from before the amalgamation that you haven’t used yet, you might be able to use it after the companies join together. Here’s how it works:

You can use the credit in the year the companies join or later if you follow the rules in sections LK 1 to LK 5. Also, each company that’s joining must have been able to use the credit before they joined, as explained in section LK 6.

If you have tax credits from two or more companies that are joining, and you use these credits against the new company’s tax bill, you need to follow some rules:

If the credits are from different tax years, use the oldest ones first. If they’re from the same tax year, you can choose the order you want to use them in. Just tell the tax office (the Commissioner) what order you pick. If you don’t choose, the credits will be used equally across your tax bill.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518185.

Topics:
Money and consumer rights > Taxes
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“How tax credits can be used when companies join together”

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

LK 14Use by amalgamated company of credits carried forward

  1. This section applies when an amalgamated company has a tax credit under this subpart for a tax year before that in which the amalgamation takes place, and the credit has not been used before the date of amalgamation.

  2. The credit may be carried forward to the tax year of amalgamation or a later tax year only if—

  3. the requirements of sections LK 1 to LK 5 are met; and
    1. the credit could be made available under section LK 6 for the part of the tax year ending with the date of the amalgamation to each amalgamating company.

      1. If the tax credits of 2 or more amalgamating companies are credited under section LK 13 against the amalgamated company’s income tax liability for a tax year, those tax credits must—

      2. if resulting from tax payable in 2 or more tax years, be credited in the same order as arising; and
        1. if resulting from tax payable in the same tax year, be credited, so far as the tax extends,—
          1. in the order chosen by the amalgamated company by notice to the Commissioner; or
            1. otherwise, on a pro rata basis.

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            Notes
            • Section LK 14 list of defined terms notice: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).