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Income Tax Act 2007

Taxation of certain entities - Look-through companies

HB 3: Loss balances extinguished

You could also call this:

“Companies lose previous tax losses when becoming look-through companies”

When a company becomes a look-through company, it can’t keep any loss balances from before it was a look-through company. This means if the company had any losses from previous years when it wasn’t a look-through company, those losses are cancelled. The same thing happens if a company that wasn’t a look-through company joins together with a look-through company. Any losses from when it wasn’t a look-through company are cancelled. This rule applies even though sections HB 1 and HB 2 might say something different. The losses that are cancelled are the ones described in Part I of the law, which talks about how tax losses are treated.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3683717.

Topics:
Money and consumer rights > Taxes
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HB 2: Previous income and expenditure or loss, or

“Income, expenses, or losses from previous years may still affect your tax”

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HB 4: General provisions relating to disposals, or

“Rules for selling or changing your part of a look-through company”

Part H Taxation of certain entities
Look-through companies

HB 3Loss balances extinguished

  1. Despite sections HB 1 and HB 2, a loss balance under Part I (Treatment of tax losses) is cancelled if the loss balance arose in relation to an income year when a company was not a look-through company, or when a company that amalgamates with a look-through company was not a look-through company.

Notes
  • Section HB 3: inserted, on (applying for income years beginning on or after 1 April 2011, and for the purposes of the Commissioner receiving LTC elections, on and after 21 December 2010), by section 78(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).