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Income Tax Act 2007

Memorandum accounts - General provisions - Amalgamation of companies in consolidated groups

OA 15: When credits or debits due to consolidated group but not recorded

You could also call this:

“How unrecorded financial items are handled when companies merge”

This law is about what happens to certain financial records when companies join together. It applies when a group of companies that work together (called a consolidated group) joins with another company. The consolidated group keeps track of its tax credits in an account called an imputation credit account.

If there are any credits or debits that belong to the consolidated group, but haven’t been recorded in their account before the companies join, these will be recorded in the new combined company’s account. This is the general rule, but there are some exceptions.

One exception is for a special kind of debit related to changes in who owns the company’s shares. This debit doesn’t get moved to the new combined company’s account.

In the end, any credits or debits that do get moved will be recorded in the new combined company’s imputation credit account.

Remember, if you want to know more about how companies join together, you can look at section OA 14. If you’re curious about the special debit for changes in share ownership, you can check section OP 42.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518682.

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“Rules for keeping track of ownership when companies in a group join together”

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“Old rule about company mergers and tax accounts no longer applies”

Part O Memorandum accounts
General provisions: Amalgamation of companies in consolidated groups

OA 15When credits or debits due to consolidated group but not recorded

  1. This section applies on a resident’s restricted amalgamation referred to in section OA 14 when, at the time of the amalgamation, a consolidated group maintains—

  2. an imputation credit account.

          1. A credit or a debit due to the consolidated group but not recorded in its 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 OP 42 (Consolidated ICA debit for loss of shareholder continuity) and described in table O20: imputation debits of consolidated imputation groups, row 16 (debit for loss of shareholder continuity).

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

          Compare
          Notes
          • Section OA 15(1)(b): repealed, on , by section 185(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
          • Section OA 15(1)(c): repealed, on (applying for income years beginning on or after that date), by section 89(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section OA 15(1)(d): repealed, on , by section 185(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
          • Section OA 15(3): replaced, on (applying for income years beginning on or after that date), by section 89(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section OA 15(4): replaced, on , by section 185(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
          • Section OA 15 list of defined terms branch equivalent tax account: repealed, on , by section 89(5) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section OA 15 list of defined terms CTR account: repealed (with effect on 1 July 2011), on , by section 89(4) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).
          • Section OA 15 list of defined terms FDP account: repealed, on , by section 185(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
          • Section OA 15 list of defined terms policyholder credit account: repealed, on , by section 185(5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).