Section LK 11 — Income Tax Act 2007: When group membership lacking in tax year in which credit used

LK 11 When group membership lacking in tax year in which credit used When this section applies (1) This section applies when a company that is part of a consolidated group of companies has a credit carried forward for a tax year, but the company is not part of the consolidated group for the whole tax year in which the credit carried forward is used. Limitation on amount (2) The amount of the credit carried forward and made available for the consolidated group to use under section LK 9(2) is limited to the least of— (a) the amount of the credit carried forward shown in financial statements provided with the consolidated group’s return of income for the income year corresponding to the tax year that— (i) relate to the part of the income year when the company was part of the consolidated group; and (ii) disclose the amount that would be the net income attributable to the part of the income year when the company is part of the consolidated group, determined on a fair and reasonable basis of attribution: (b) the amount of the credit calculated using the formula in subsection (3): (c) the amount referred to in section LK 10(2) . Formula (3) The amount referred to in subsection (2)(b) is calculated using the formula— amount carried forward − (part-year credits + pre-consolidation credits). Definition of items in formula (4) In the formula,— (a) amount carried forward is the amount of the credit carried forward under section LK 9(2) before applying section LK 10 and this section: (b) part-year credits is the amount of the credit carried forward that the company may use under section LA 2 or LA 4 (which relate to the company’s income tax liability) for the part of the tax year before the company becomes part of the consolidated group: (c) pre-consolidation credits is the amount of the credits carried forward that the company must make available for another consolidated group of which it was part before becoming part of the consolidated group. Defined in this Act: amount , company , consolidated group , corresponding income year , income year , net income , return of income , tax year , Compare: 2004 No 35 s LC 16(5)