Chartered Accountants ANZ recently provided feedback to Inland Revenue on the draft standard practice statement Loss offset elections between group companies. The statement set out certain practices that the Commissioner will accept for offsetting losses by election between group companies. It also set out the consequences of specific events that can impact on a loss offset and how these should be addressed.
The draft statement intends to replace SPS 17/03 and is largely unchanged. CA ANZ recommended the statement provide guidance on whether or not two companies form a group of companies and the commonality period – including when companies have different balance dates. In our view there is a lack of understanding of the prerequisites for grouping tax losses and a more detailed explanation would assist taxpayers.