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Income Tax Act 2007

Treatment of tax losses - Carrying forward companies’ loss balances: continuity of business activities

IB 5: When group companies treated as single company

You could also call this:

“Group companies in New Zealand are treated as one for certain tax purposes”

When you have companies that live in New Zealand and are part of the same group, they are treated as if they were one big company for some special tax rules. This happens even if the companies change owners, as long as they stay in the same group right before and after the change.

The government looks at these companies as one unit when they’re thinking about tax losses. They also use this idea when they’re looking at some tricky plans that people might make to avoid paying taxes on their losses.

If you want to know more about those tricky plans, you can look at sections GB 3BA to GB 3BAC of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS486066.

Topics:
Money and consumer rights > Taxes
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“How long a company can use tax losses after ownership changes”

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IC 1: Company A making tax loss available to company B, or

“Sharing tax losses between companies in the same group”

Part I Treatment of tax losses
Carrying forward companies’ loss balances: continuity of business activities

IB 5When group companies treated as single company

  1. New Zealand resident companies that are part of the same group of companies immediately before and immediately after an ownership continuity breach occurs for each of the companies are treated as a single company for the purposes of this subpart and sections GB 3BA to GB 3BAC (which relate to arrangements involving tax losses).

Notes
  • Section IB 5: inserted (with effect on 1 April 2020), on , by section 99(1) (and see section 99(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
  • Section IB 5: amended (with effect on 1 April 2020), on , by section 120(1) (and see section 120(3) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
  • Section IB 5 list of defined terms New Zealand resident: inserted (with effect on 1 April 2020), on , by section 120(2) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).