Section FM 12 — Income Tax Act 2007: Expenditure when deduction would be denied to consolidated group

FM 12 Expenditure when deduction would be denied to consolidated group When this section applies (1) This section applies when a company incurs expenditure or loss or an amount of depreciation loss in a tax year or part of a tax year in which it is part of a consolidated group that— (a) is not expenditure or loss to which section FM 10 applies; and (b) would be allowed as a deduction to that company in the absence of this section. No deduction (with exception) (2) The company is denied a deduction for an amount under section DV 17 (Consolidated groups: expenditure or loss incurred by group companies) if the deduction would be denied to the consolidated group, treating the group as if it were 1 company, except to the extent to which the expenditure or loss or amount of depreciation loss is interest on money that the company has borrowed from a person that is not part of the consolidated group, and the company— (a) is allowed a deduction under section DB 7 (Interest: most companies need no nexus with income) or DB 8 (Interest: money borrowed to acquire shares in group companies): (b) would be allowed a deduction under section DB 7 or DB 8 because the company is treated as having used the money borrowed, to the extent of the actual acquisition cost, to acquire certain shares when, through interposed intra-group borrowings, the money borrowed was in fact used by another group company in acquiring the shares. Defined in this Act: amount , company , consolidated group , deduction , depreciation loss , interest , loss , share , tax year , Compare: 2004 No 35 s HB 2(1)(d) Section FM 12(2): amended (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 52(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).