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Income Tax Act 2007

Income - Recoveries

CG 2E: Remitted and other amounts: income apportionment

You could also call this:

“Splitting special income among company group members after shared tax losses”

This section of the law talks about how to handle certain kinds of income in a group of companies. Here’s what you need to know:

If a company in a group gets income because of special rules, and that income is related to a tax loss that was shared among companies in the group, the company can choose how to split up this income among the other companies.

The amount of income they can split up can’t be more than the total tax loss from earlier years.

If the company doesn’t choose how to split the income, it will be divided equally among all the companies in the group.

When splitting the income, the company that originally had the tax loss isn’t included. Also, to be part of this income split, a company must be in the group when the special income rules apply.

This rule doesn’t apply to companies that are part of a consolidated group. Those companies have different rules to follow.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6187275.

Topics:
Money and consumer rights > Taxes
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Part C Income
Recoveries

CG 2ERemitted and other amounts: income apportionment

  1. This section applies when—

  2. an amount of income is treated as having been derived by a company under section CG 2C or CG 2D; and
    1. in relation to the income, some or all of a tax loss of a company that is part of a group of companies has been made available to more than 1 company in the group.

      1. The company that is treated as deriving the income may choose to apportion the income among other companies in the group.

      2. The amount of the income referred to in subsection (2) must be no more than the total tax loss referred to in section CG 2C(1)(e) or CG 2D(1)(d), as applicable, for all previous tax years.

      3. If the company that is treated as deriving the income does not make an apportionment under subsection (2), the income must be divided equally among the companies in the group.

      4. For the purposes of subsections (2) and (4),—

      5. the company that made the tax loss available is treated as excluded from the group:
        1. the company must be part of the group of companies at the date on which section CG 2C(3) or CG 2D(3) applies.

          1. This section does not apply to a company that is part of a consolidated group of companies, for which, see section FM 5(3) to (5) (Liability when company leaves consolidated group).

          Notes
          • Section CG 2E: inserted (with effect on 22 November 2013 and applying when an event, listed in the following paragraphs, occurs after this date: (a) company A is removed from the register of companies; (b) company C is insolvent and leaves the group of companies; (c) company D leaves the group of companies), on , by section 18(2) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).