Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Memorandum accounts - Memorandum accounts of consolidated groups

OP 2: When credits and debits arise only in group accounts

You could also call this:

“Rules for recording credits and debits in group company accounts”

When you’re part of a group of companies, some special rules apply to how credits and debits are recorded. These rules are about something called “memorandum accounts.”

In most cases, credits and debits can only be recorded in the group’s shared account, not in the individual accounts of each company in the group. This means that when something good (a credit) or bad (a debit) happens, it affects the whole group together, not just one company.

There are some exceptions to this rule, but they have to be clearly stated elsewhere in the law.

Even if a company in the group is supposed to record a credit or debit, or if the credit or debit could normally go into that company’s own account, these rules still apply. The credit or debit will usually end up in the group’s shared account instead.

Remember, this is just a general explanation. The actual law might have more details or exceptions that aren’t covered here.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519412.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

OP 1: Memorandum accounts of consolidated groups, or

“How tax records work for groups of companies”

Next

OP 3: Changes in consolidated imputation groups, or

“How imputation credit accounts work when consolidated groups change”

Part O Memorandum accounts
Memorandum accounts of consolidated groups

OP 2When credits and debits arise only in group accounts

  1. A credit may arise only in the memorandum account of a consolidated group and not in the memorandum account of a group company, unless another provision expressly states otherwise.

  2. A debit may arise only in the memorandum account of a consolidated group and not in the memorandum account of a group company, unless another provision expressly states otherwise.

  3. The credit referred to in subsection (1) and the debit referred to in subsection (2) are listed in provisions in this subpart.

  4. This section applies despite—

  5. the obligation that a group company may have under this Part to record a credit or debit; and
    1. the fact that the credit and debit referred to in this section may otherwise be eligible to give rise to a credit or debit in the group company’s account.

      Compare