Section IP 4 — Income Tax Act 2007: Breach in income year in which tax loss component arises

IP 4 Breach in income year in which tax loss component arises When this section applies (1) This section applies for the purposes of sections IA 6 and IC 5 (which relate to the use and grouping of tax losses) when company A has a tax loss component arising in an income year in which either the continuity or commonality requirements for grouping tax losses are breached. Modified requirements (2) The tax loss component is included in a tax loss that company A makes available under section IA 3(2) (Using tax losses in tax year) to company B only to the extent to which the following requirements, which modify those set out in section IC 5 (Company B using company A’s tax loss), are met: (a) the tax loss component arises in the common span; and (ab) the amount of the tax loss component is no more than the net income that company B derives in the common span; and (b) continuity of ownership in company A under section IC 2(1) (Threshold levels for grouping tax losses in tax year) applies from the beginning to the end of the common span; and (c) company A and company B provide the Commissioner with adequate financial statements under section IP 6 ; and (d) company A notifies the Commissioner of the treatment of the tax loss under section IP 7 . Determining amounts (3) For the purposes of determining the amount of tax loss that company A and company B may use, sections IC 5 and IC 8 (which relate to the treatment of tax losses by companies) apply as if the common span were a corresponding income year. Relationship with section IC 8 (4) Despite subsection (2)(ab), section IC 8 overrides this section in limiting the amount that may be used when the net income derived in the common span is more than the net income of company B for the income year. Defined in this Act: amount , Commissioner , common span , company , corresponding income year , income year , net income , notify , tax loss , tax loss component , Compare: 2004 No 35 s IG 2(4) Section IP 4(2)(ab): inserted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 91(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IP 4(4) heading: added (with effect on 1 April 2008), on 29 August 2011, by section 91(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IP 4(4): added (with effect on 1 April 2008), on 29 August 2011, by section 91(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).