Section IP 5 — Income Tax Act 2007: Breach in tax year in which loss balance is grouped

IP 5 Breach in tax year in which loss balance is grouped 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 loss balance carried forward to a tax year in which either the continuity or commonality requirements for grouping tax losses are breached. Modified requirements (2) The loss balance 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 amount of company A's loss balance carried forward to the tax year in which the breach occurred is not more than the amount of— (i) company B's net income for the common span, if no company in the group other than company B has net income for the common span of more than zero; or (ii) the total of the amounts of net income for the common span of companies in the group; and (b) continuity of ownership in company A under section IC 2(1) (Threshold levels for grouping tax losses in tax year) applies in the common span; and (c) company B provides 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 the loss balance 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 tax year. Defined in this Act: amount , Commissioner , common span , company , loss balance , notify , tax loss , tax loss component , tax year , Compare: 2004 No 35 s IG 2(2)(b)–(f), (5) Section IP 5(2)(a): substituted (with effect on 1 April 2008), on 7 September 2010 (applying for the 2008–09 and later income years), by section 84(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).