Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

General collection rules - General withholding and payment obligations

RA 20: Amalgamation of companies

You could also call this:

“How tax responsibilities change when companies merge”

When companies join together, it’s called amalgamation. If a company stops existing because of this joining, any money it was supposed to withhold and pay to the Commissioner of Inland Revenue is now the responsibility of the new, combined company.

The new company is treated as if it paid the tax that the old company withheld in the year before they joined. This is important for figuring out if the company meets the requirements for the close company option.

The close company option is a special rule for some types of companies. To use this option, a company needs to have withheld a certain amount of tax. When companies join together, the new company can count the tax withheld by the old company to see if it qualifies for this option.

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 It might be out of date or be missing some parts.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=DLM1519776.

Topics:

Money and consumer rights > Taxes

RA 19: Refunds of excess amounts or when amounts mistakenly paid, or

“Getting tax refunds when you've paid too much or by mistake”

RA 21: Regulations, or

“Rules for tax payments and job-related loans”

Part R General collection rules
General withholding and payment obligations

RA 20Amalgamation of companies

If an amalgamating company ends its existence on a resident’s restricted amalgamation, an unsatisfied obligation that the amalgamating company has at the time of the amalgamation to withhold and pay an amount of tax to the Commissioner under this Part is treated as an obligation of the amalgamated company.
For the purpose of determining whether the threshold under section RD 60 (Close company option) has been met, the amalgamated company is treated as paying the gross amounts of tax withheld under section RA 5(1)(a) and (c) by the amalgamating company in the income year before that in which the amalgamation takes place.

Compare

2004 No 35 ss NC 15(7), ND 13(8), ND 14(8), NEB 3(2), NH 4(8)

Notes

Section RA 20(1) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20(2) heading: added (with effect on 1 April 2008), on 6 October 2009, by section 493(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20(2): added (with effect on 1 April 2008), on 6 October 2009, by section 493(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms amalgamation: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms close company: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms gross: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 list of defined terms income year: inserted (with effect on 1 April 2008), on 6 October 2009, by section 493(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
Section RA 20 compare note: amended, on 1 April 2008, by section 525 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).