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Income Tax Act 2007

Memorandum accounts - General provisions - When companies amalgamate

OA 10: When credits or debits due to amalgamating company but not recorded

You could also call this:

“Credits and debits not yet recorded when companies merge”

When companies join together (amalgamate), there are special rules about credits and debits that haven’t been recorded yet. This applies when the companies are combining in New Zealand (a resident’s restricted amalgamation).

If a company that’s joining with others has an imputation credit account, any credits or debits that were due to this company, but not yet recorded, will be added to the same type of account in the new combined company. However, there are two exceptions to this rule.

The first exception is for a special kind of debit called a “debit for loss of shareholder continuity” in the imputation credit account. This type of debit is described in section OB 41 and isn’t moved to the new company’s account.

The second exception is that all credits or debits will be recorded in the imputation credit account of the new combined company, even if they were originally for a different type of account.

These rules help make sure that important financial information isn’t lost when companies join together.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518671.

Topics:
Money and consumer rights > Taxes
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Part O Memorandum accounts
General provisions: When companies amalgamate

OA 10When credits or debits due to amalgamating company but not recorded

  1. This section applies on a resident’s restricted amalgamation if, at the time of the amalgamation, an amalgamating company maintains—

  2. an imputation credit account.

            1. A credit or a debit due to the amalgamating company but not recorded in its memorandum account before the date of amalgamation is recorded in the same type of memorandum account of the amalgamated company. Subsections (3) and (4) override this subsection.

            2. Subsection (2) does not apply to a debit for loss of shareholder continuity in an imputation credit account arising under section OB 41 (ICA debit for loss of shareholder continuity) and described in table O2: imputation debits, row 14 (debit for loss of shareholder continuity).

            3. The credit or debit is recorded in the imputation credit account of the amalgamated company.

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            Notes
            • Section OA 10(1)(b): repealed, on , by section 181(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
            • Section OA 10(1)(c): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on , by section 87(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
            • Section OA 10(1)(d): repealed, on (applying for income years beginning on or after that date), by section 87(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
            • Section OA 10(1)(e): repealed, on , by section 181(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
            • Section OA 10(3): replaced, on (applying for income years beginning on or after that date), by section 87(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
            • Section OA 10(4): replaced, on , by section 181(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
            • Section OA 10 list of defined terms branch equivalent tax account: repealed, on , by section 87(7) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
            • Section OA 10 list of defined terms CTR account: repealed (with effect on 1 July 2011), on , by section 87(6) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
            • Section OA 10 list of defined terms FDP account: repealed, on , by section 181(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
            • Section OA 10 list of defined terms policyholder credit account: repealed, on , by section 181(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).