Income Tax Act 2004

  • repealed
  • Income Tax Act 2004: repealed, on 1 April 2008, by section ZA 1(1) of the Income Tax Act 2007 (2007 No 97).
IG 1 Companies included in group of companies

(1)

Subject always to the express provisions of this section and section IG 2, the provisions of this section and section IG 2 are intended to limit the circumstances in which a company that has a net loss for an income year, or that has a net loss able to be carried forward to that income year in accordance with section IE 1 or IF 1, may offset part or the whole of that net loss against the net income of another company to those circumstances where, at all times during the income year in which the net loss arises and all succeeding income years (if any) up to and including the income year in which the net loss is offset, the company which has the net loss and the other company are, at least to the extent of 66%, commonly owned (whether or not always during that period by the same group of persons).

(2)

For the purposes of this Act, in relation to any 2 or more companies, none of which is a portfolio tax rate entity,

(a)

where at any time there is a group of persons—

(i)

the aggregate of whose common voting interests is equal to or greater than 66%; and

(ii)

in any case where at that time a market value circumstance exists in respect of any of the companies, the aggregate of whose common market value interests is equal to or greater than 66%,—

those companies are treated as a group of companies at that time; and

(b)

where, in relation to any income year or other period, there is at all times during that income year or other period a group of persons (whether or not always during that income year or other period the same group of persons)—

(i)

the aggregate of whose common voting interests is equal to or greater than 66%; and

(ii)

in any case where at any relevant time a market value circumstance exists in respect of any of the companies, the aggregate of whose common market value interests is equal to or greater than 66%,—

those companies are treated as a group of companies for that income year or other period.

(2B)

For the purposes of this Act, in relation to any 2 or more companies of which 1 is a portfolio tax rate entity, the companies are treated as being a group of companies for an income year or other period if—

(a)

a portfolio tax rate entity owns 100% of the voting interests in the other companies; and

(b)

each company that is not a portfolio tax rate entity is a portfolio land company.

(3)

For the purposes of this Act, references to any 2 or more companies being at any time or for any period a wholly-owned group of companies mean any 2 or more companies which would be a group of companies at that time or for that period if—

(a)

the references in subsection (2) to 66% were instead references to 100%; or

(b)

the companies would be a wholly-owned group of companies under paragraph (a) if—

(i)

any nominal shareholding held by any person solely for the purpose of complying with the requirements of company law were disregarded; or

(ii)

the shares in any such company held by the trustee of, or held by employees or former employees of the company as a consequence of the operation of, any share purchase scheme were disregarded to the extent that the shares so held by the trustee or employees or former employees—

(A)

represent no more than 3% of the voting interests in the company; and

(B)

in any case where at that time or during that period a market value circumstance exists in respect of the company, represent no more than 3% of the market value interests in the company.

(4)

Except as expressly provided in this Act, every company in a group of companies is liable for income tax in the same manner as if it were a company not included in a group of companies.

(5)

For the purposes of this section, in relation to any 2 or more companies at any time,—

(a)

the common voting interest of any person who has or is treated as having a voting interest in each of those companies at that time by virtue of section OD 3 is that percentage which is equal to—

(i)

the percentage voting interest of the person in each of the companies at that time, if those percentages are the same in the case of each company; or

(ii)

the lowest of the percentage voting interests of the person in each of the companies at that time, if those percentages differ as between the companies; and

(b)

the common market value interest of any person who is treated as having a market value interest in each of those companies at that time by virtue of section OD 4 is that percentage which is equal to—

(i)

the percentage market value interest of the person in each of the companies at that time, if those percentages are the same in the case of each company; or

(ii)

the lowest of the percentage market value interests of the person in each of the companies at that time, if those percentages differ as between the companies.

Compare: 1994 No 164 s IG 1

Section IG 1(2): amended, on 1 October 2007, by section 37 of the Taxation (KiwiSaver and Company Tax Rate Amendments) Act 2007 (2007 No 19).

Section IG 1(2): amended, on 1 October 2007, by section 100 of the Taxation (Savings Investment and Miscellaneous Provisions) Act 2006 (2006 No 81).

Section IG 1(2B): inserted (with effect from 1 October 2007), on 19 December 2007, by section 127 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).