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Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

OB 13: ICA transfer of debit balance on leaving wholly-owned group

You could also call this:

“Transfer of money owed in tax account when leaving a company group”

You can move some of the money you owe in your imputation credit account when you leave a group of companies that are all owned by the same person or company. This is called transferring a debit balance.

To do this, a few things need to be true. You must have been part of the group recently, but now you’re leaving or about to leave. You need to owe money in your imputation credit account. The group must have lost more than $1,000,000 in the year before you leave.

If all these things are true, you can choose to move some or all of the money you owe. When you do this, it becomes money you’re owed in your account, and money that another company in the group owes in their account.

To make this happen, you need to fill out a form that the Commissioner asks for. You also need to get a note from the other company agreeing to take on the debt. You have to do this before you leave the group.

If you don’t have all the information you need when you leave the group, you can ask the Commissioner for more time to get the note from the other company.

The date this all happens is the day you leave the group.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518724.

Topics:
Money and consumer rights > Taxes
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Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 13ICA transfer of debit balance on leaving wholly-owned group

  1. If the requirements of subsections (2) and (3) are met, an ICA company may choose to transfer a debit balance in its imputation credit account when the company stops being part of a wholly-owned group of companies.

  2. The company may make an election under subsection (1) if, at a particular time,—

  3. the company is or has recently been part of a wholly-owned group of companies; and
    1. the company is no longer part of the group, or will shortly no longer be part of the group; and
      1. the company has a debit balance in its imputation credit account; and
        1. the group has a loss balance carried forward from earlier tax years of more than $1,000,000 for the income year before the particular time.

          1. The company may choose that an amount of no more than the debit balance is—

          2. an imputation credit in its imputation credit account; and
            1. an imputation debit in the imputation credit account of another company in the group after the date on which the company stops being part of the wholly-owned group.

              1. The imputation credit in subsection (3)(a) is referred to in table O1: imputation credits, row 11 (debit balance on leaving wholly-owned group). The imputation debit in subsection (3)(b) is referred to in table O2: imputation debits, row 17 (debit balance on leaving wholly-owned group).

              2. The company must make the election—

              3. in a form that the Commissioner may require; and
                1. with a notice of agreement from the group company in whose account the imputation debit arises under subsection (3)(b); and
                  1. before the company stops being part of the wholly-owned group.

                    1. For the purposes of subsection (5)(b), the Commissioner may allow further time in which to provide the notice if the company did not have sufficient information at the time it stops being part of the wholly-owned group.

                    2. The credit date is the day the company stops being part of the wholly-owned group.

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