Tax requirements for consolidated groups
A consolidated group files one company income tax return that includes the income of all the companies in the group. This return is filed under an IRD number that's separate from the individual companies’ numbers. One member of the group must be the nominated company to:
- file income tax returns
- pay income tax of the group on behalf of all members.
The member companies only need to file separate income tax returns when a company enters or leaves the group during the year.
The group will usually only receive one income tax assessment. There may be separate assessments when there's a consolidation during the year.
Each member is responsible for their share of any income tax liability while a member of the group.
The group's assessable income is the total of the member companies’ combined assessable income.
From 15 March 2017 a New Zealand tax resident that is also a tax resident in another country can be a member of a consolidated group of companies.
Loss carry-forward and grouping
Common loss carry-forward and grouping activities apply to a consolidated group as if it were one company. The loss brought forward balance in the group’s first return is nil.
Losses before consolidation remain with the individual members. In some situations, a member's losses before consolidation may be offset against group assessable income.
If a member has losses from before consolidation that are not offset against group income, they can either:
- carry the losses forward to be offset against further income when the member leaves the group
- offset the losses to a company 66% that's commonly owned, including another consolidated group.
Losses are offset on a first in, first out basis. They are distributed proportionately to each member if they arise in the same income year.
The group must keep its own separate imputation credit account (ICA).
The opening balance of a newly formed group imputation credit account is nil. An existing group’s balance is the closing balance of the previous imputation year.
Each group member's individual imputation credit account is kept separately from the group imputation credit account.
Individual imputation credit accounts will record the balance to the date of consolidation.
Each member of a consolidated group is required to file an imputation return each year, in accordance with section 69 of the Tax Administration Act 1994.