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IR4 Question 27 Net losses and subvention payments

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 see Question 38 at IR4 Question 38 Lowest economic interests of shareholders.

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 brought 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 the net loss is incurred in and ending with the year of offset.

The amount of loss offset cannot exceed the taxable income of the profit company and neither may the amount of loss to be offset exceed the net loss of the loss company.

Record individual details of the losses claimed or transferred and subvention payments received or made at Questions 39E or 39F. The total of these must equal Boxes 27 or 27A 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.

Net loss and profit amounts allowed to be offset are based on periods where continuity and commonality requirements are met for all companies taking part 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 minus sign in the relevant last box. Attach 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 can be offset against any group company profit (including non-qualifying company profits).

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