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Income Tax Act 2007

General collection rules - Provisional tax - Table R1: Summary of instalment dates and calculation methods for provisional tax

RC 31: Consolidated groups using GST ratio method

You could also call this:

“How tax groups calculate payments using GST ratios when companies join or leave”

When a group of companies work together as one big company for tax purposes, they can use something called a GST ratio to figure out their tax payments. Here’s how it works:

If a new company joins the group at the start of the tax year, and this makes the group too big to use the GST ratio, they can’t use it anymore. But if the group is still small enough even with the new company, they can keep using it. They just need to recalculate the ratio to include the new company.

If a new company joins during the tax year, the group can keep using their GST ratio. They just need to recalculate it to include the new company, as long as they still meet the other rules.

If a group wasn’t using a GST ratio before, and a company that was using one joins them, the group can’t start using a GST ratio that year.

When they recalculate the GST ratio, they need to include the new company’s tax and sales from the previous year. This new ratio is used for tax payments from the day the new company joins.

If a company leaves the group during the tax year, there are special rules in sections RC 17(3) and RC 18(4) or (5) about what happens to their tax payments.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519902.

Topics:

Money and consumer rights > Taxes

RC 30: Consolidated groups using estimation method, or

“How to estimate tax when a company joins or leaves a group”

RC 32: Wholly-owned groups of companies, or

“Companies in the same group can share tax payments”

Part R General collection rules
Provisional tax: Table R1: Summary of instalment dates and calculation methods for provisional tax

RC 31Consolidated groups using GST ratio method

Sections RC 8, RC 9(6), RC 11, and RC 15 to RC 19 apply to a consolidated group of companies with the following modifications:
if a consolidated group that is eligible to use, or is using, a GST ratio for a tax year is joined by a company, the following subparagraphs apply:
1. if the company joins at the start of the tax year and, as a result, the threshold in section RC 16(2)(a) is exceeded, the group is no longer eligible to use a GST ratio:
2. if the company joins at the start of the tax year, and the group, allowing for the inclusion of the company, is eligible under section RC 16(1), the group may use a GST ratio, subject to the recalculation of the ratio under paragraph (c):
3. if the company joins at some time in the tax year, the group may continue to use a GST ratio for the tax year, as recalculated under paragraph (c), provided the requirements for eligibility other than the threshold in section RC 16(2)(a) are met:
if a consolidated group that does not determine provisional tax payable for a tax year using a GST ratio, is joined by a company that is using a GST ratio for the tax year, the group may not start using a GST ratio for this purpose for the tax year:
for the purposes of paragraph (a),—
1. the group must recalculate the GST ratio applying for a tax year to include the residual income tax of the company for the preceding tax year and the total taxable supplies of the company for the corresponding income year, applying section RC 8(3) if required; and
2. the recalculated GST ratio applies to provisional tax payments made for the corresponding income year on or after the date on which the company joins the group:
sections RC 17(3) and RC 18(4) or (5), as applicable, apply to a company that leaves a consolidated group at some time in a tax year.

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2004 No 35 s MB 32