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Income Tax Act 2007

Timing and quantifying rules - Allocation of deductions for excess residential land expenditure - Application of rules by certain entities

EL 14: Continuity rules for companies

You could also call this:

“Rules for companies using leftover money from previous years”

If you’re a company, you need to know about some special rules for using unused excess amounts in later years. These amounts are like leftover money that you couldn’t use before. You might want to use this money later, but there are some rules about when you can do this.

You can’t use these leftover amounts in a later year if certain other rules would stop you from doing so. These other rules are about carrying forward tax losses. The rules that might stop you are called sections IA 5, IB 3, IP 3, and IP 3B.

When you’re thinking about using your leftover amounts, you should treat them as if they were unused tax loss components. This means you need to check if those other rules would let you carry forward a tax loss. If they wouldn’t let you carry forward a tax loss, then you can’t use your leftover amounts either.

This rule applies even if other parts of the law (sections EL 4, EL 5, EL 7, and EL 16) might seem to say something different. The rule about not being able to use leftover amounts is more important than what those other sections say.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS223691.

Topics:
Money and consumer rights > Taxes
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Part E Timing and quantifying rules
Allocation of deductions for excess residential land expenditure: Application of rules by certain entities

EL 14Continuity rules for companies

  1. Despite sections EL 4, EL 5, EL 7, and EL 16, a company may not allocate an unused excess amount to a later income year if sections IA 5, IB 3, IP 3, and IP 3B (which relate to tax losses carried forward) would apply to restrict the carrying forward of the amount to the later income year, treating the amount as if it were an unused tax loss component.

Notes
  • Section EL 14: inserted (with effect on 1 April 2019), on , by section 62(1) (and see section 62(2) and (3) for application) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
  • Section EL 14: amended (with effect on 1 April 2020), on , by section 87 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
  • Section EL 14: amended (with effect on 1 April 2020), on , by section 47 of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).