Section IC 5 — Income Tax Act 2007: Company B using company A’s tax loss

IC 5 Company B using company A’s tax loss Requirements (1) Company A may make a tax loss available to company B to subtract from its net income under section IA 3(2) (Using tax losses in tax year) only if— (a) company A and company B have minimum common ownership for the relevant period as set out in sections IC 2(2) and IC 6 ; and (b) company A meets the residence requirements of section IC 7 ; and (c) company A has the required continuity of ownership under section IC 2(1) and, if it applies, section IC 10(2)(a) ; and (d) the amount falls within the limits set by section IC 8(1) and (2) ; and (e) the payment and notification requirements of section IC 9 are met. Method: election or subvention payment (2) Having met all the requirements set out in subsection (1), company A may— (a) choose to make a tax loss that it has in a tax year available to company B to use in the tax year, notifying the Commissioner as described in section IC 9 ; or (b) agree with company B that company B should bear the amount of company A’s tax loss, or take a share in it, in return for a payment by company B to company A by the date set out in section IC 9 ; or (c) apply both paragraphs (a) and (b) in relation to the tax loss. Amounts used in tax year (3) Company B must subtract the amount of the tax loss referred to in subsection (2)(a) or the payment referred to in subsection (2)(b), as applicable, from its net income for the tax year in relation to which company A makes the amount available or receives the payment. When decisions made (4) If company A chooses to make the amount available to company B under subsection (2)(a), the decision is irrevocable. Nature of payment (5) To the extent to which an amount of tax loss is subtracted from net income, a payment from company B to company A under subsection (2)(b) is not a dividend. Part-year tax losses (6) Sections IP 4 and IP 5 (which relate to losses in part-years) modify this section for part-year calculations. Tax years before 1981–82 and between 1981–82 and 1991–92 (7) Section IZ 7 (Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92) modifies the requirements of— (a) subsection (1)(a) for a tax loss component that arises in tax years between 1981–82 and 1991–92; and (b) subsection (1)(b) for a tax loss component that arises in tax years before the 1991–92 tax year; and (c) subsection (1)(a) for a tax loss component that arises in tax years before the 1981–82 tax year. Defined in this Act: amount , Commissioner , company , dividend , net income , notify , pay , tax loss , tax loss component , tax year , Compare: 2004 No 35 s IG 2(2)