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Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

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Loss grouping for companies with 66% or more common shareholding

Written by Greg Millar on November 6th, 2015.      0 comments

Companies having 66% or more common shareholding can be grouped for tax purposes.

pie-chart-153903 1280-162The profit company can use the losses of the loss company. Technically speaking the Imputation Credit Accounts (ICAs) get out of whack as the profit company finishes up with too few imputation credits, but we can help you deal with that should it apply.

IRD to the rescue!

The tax department is proposing to allow the loss company to transfer imputation credits to the profit company. It helps overcome this problem and an adverse tax consequence for minority shareholders.

However, if the transfer results in a debit balance in the ICA of the loss company at 31 March, the department thinks taxpayers will pay in funds to cover it.

From a small business perspective, it seems we might often be better off continuing with subvention payments.

At Alliotts looking after your tax is not just about helping you to pay less tax – although we do make sure you’re not paying too much. With IRD proposing an amendment that may assist minority shareholders that can be affected by the related companies' abilities to offset profits and losses, we will monitor the situation and advise any of our clients to whom this may apply.

 

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