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Online IR4 2004

Help IR4 2004 - Net losses and subvention payments

In order to offset net losses there must be a common shareholding of at least 66%, and 66% continuity of minimum voting interest must also be maintained (or 66% market value interest if a market value circumstance exists). To calculate voting or market value interest read the notes to Question 37.

To offset a net loss incurred during a current income year, the loss company and the profit company must be members of the same group at all times for that income year.

To offset a net loss carried forward, the loss company and the profit company must be members of the same group of companies for the entire period beginning with the income year in which the net loss is incurred and ending with the year of offset.

Individual details of the losses claimed or transferred and subvention payments received or made must be recorded at Questions 38F or 38G. The total of these must equal Boxes 26 or 26A respectively.

Part-year grouping

The general part-year grouping rule is that only the part of the net loss incurred in the same period as the profit is derived may be offset, if during the period:

  • the loss company maintains continuity of shareholding, and
  • commonality of shareholding between loss and profit companies has been maintained.

Therefore, net loss and profit amounts allowed to be offset are based on periods where continuity and commonality requirements are satisfied for all companies participating in a part-year grouping arrangement.

If the company received net losses from another company or made a subvention payment to another company, put a negative sign in front of the amount.

Send us a schedule setting out the names and IRD numbers of the companies, and the amount of the payment or loss.

Qualifying companies

Net losses are restricted for grouping and subvention payment purposes. A qualifying company loss (other than that of a loss attributing qualifying company) can be offset against any group company profit (including non-qualifying company profits).

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Date published: 02 Dec 2004

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