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Income Tax Act 2007

Treatment of tax losses - Cancellation of life insurer's losses

IT 2: Cancellation of life insurer's tax loss when allowed into policyholder base

You could also call this:

“Life insurer's tax loss cancelled when used as policyholder base deduction”

This law explains what happens to a life insurance company’s tax loss in certain situations. It applies to tax losses that a life insurer carries forward to tax years starting from 1 July 2010.

If you’re a life insurer and you have a special type of deduction called a “policyholder base allowable deduction” in a tax year, as described in section EZ 61, some changes happen to your tax loss. The amount of this deduction affects your tax loss in the following ways:

The same amount as the deduction is taken away from your available tax loss for that tax year. You can’t use this amount to reduce your net income under section BC 5. This amount is not considered a part of your tax loss. Finally, this amount is cancelled, which means you can’t use it for anything else.

This rule helps to balance out the special deduction you get as a life insurer, making sure you don’t benefit twice from the same amount in your tax calculations.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3113300.

Topics:
Money and consumer rights > Taxes
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IT 1: Cancellation of life insurer's policyholder net losses, or

“Cancelling old tax losses for life insurance companies”

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Part I Treatment of tax losses
Cancellation of life insurer's losses

IT 2Cancellation of life insurer's tax loss when allowed into policyholder base

  1. This section applies to the amount of a life insurer's tax loss to be carried forward to a tax year corresponding to an income year that includes 1 July 2010 and later tax years.

  2. When the life insurer has for an income year a policyholder base allowable deduction as provided by section EZ 61 (Allowance for cancelled amount: spreading), an equal amount—

  3. is removed from the life insurer's available tax loss for the tax year corresponding to the income year; and
    1. must not be subtracted from the life insurer's net income under section BC 5 for the tax year; and
      1. is not a tax loss component; and
        1. is cancelled.

          Notes
          • Section IT 2: added, on , by section 307(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
          • Section IT 2 list of defined terms tax loss component: inserted (with effect on 1 April 2008), on , by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).