ALF - Allied Farmers Limited

[golden city]

The problem is that those big shareholder has done a lot of the transaction not the small shareholders

[kiora]

What’s that about

To retain tax losses there needs to be >50% shareholders retaining their Shares?
But then the Co needs to make future profits to benefit from their tax losses

"Summary
1. This interpretation statement provides guidance on how the main aspects of the
business continuity test in s IB 3 apply. The key points discussed in the Interpretation
Statement are summarised as follows:
 The main rule in s IB 3 provides that a tax loss may be carried forward despite an
ownership continuity breach if no major change in the nature of the business
activities carried on by the company occurs during the business continuity
period, other than a permitted major change (s IB 3(2)(c)).
 Section IB 3 sets out various other criteria that must also be satisfied. Further,
targeted anti-avoidance rules in ss GB 3BAB and GB 3BAC can negate the benefit
of a tax loss carried forward under s IB 3 in prescribed circumstances.
 An ownership continuity breach for a company occurs where there is a breach in
the requirements for continuity of ownership set out in s IA 5, that, if met, enable
tax losses of the company to be carried forward (s IB 2).
 The business continuity period is typically the period starting immediately before
the ownership continuity breach and ending on the earlier of:
o the last day of the income year in which the tax loss component in question
is used; and
o the last day of the income year in which the fifth anniversary of the
ownership continuity breach falls.
However, broadly, for a company where 50% or more of its tax losses eligible for
carry-forward arose from bad debt deductions, the business continuity period
will end on the last day of the income year in which the tax loss component in
question is used. In other words, the five-year cap on the test will not apply
(s IB 4).
 Where a major change (other than a permitted major change) or a cessation
occurs part-way through an income year, the tax loss component in question
may be carried forward and set off against income arising up to the time of the
major change or cessation respectively if the company provides the
Commissioner with adequate financial statements under s IP 6 calculating the
company’s income for that part of the income year (s IP 3B).
 The main rule in s IB 3(2)(c) is concerned with the nature of the company’s
business activities. The Commissioner considers “business activities” means
“actions taken in pursuit of one or more businesses that may be carried on by the
company for income tax purposes” and that “nature” means “the basic or
inherent features, qualities, or character of a person or thing”, so the test is etc"

https://www.taxtechnical.ird.govt.nz...20221031001302

[nztx]

Didn't Robbo (during the reign of the Lost Left) bring in a variation - if the same sort of business is continued, then losses can be carried forward & offset - even with shareholding change of more major %'s ?

Now where has ALF's major Income earning priorities been going ?

The same, different, priorities into Leased property management activities or something else ?

The Weaner livestock & Saleyards parts probably havent grown so much or have retrenched ?

Has there been enough change or not enough since the time the Losses were generated to now or going forwards when or if they get offset ?

The Taxman, given te size of the Tax Losses is likely to have the whole issue put under a very fine microscope

Of course now, ALF have thrown the matter out into the public domain, so everyone is aware of it

What part of ALF's share price is attributed to the large stack of tax losses ? any, very little or none ?

An interesting one as kiora has posted

[mfd]

The tax loss issue was dealt with by IRD in late 2022/early 2023 if you look back at ALF announcements. IRD are well aware.

There was no particular share price response to this at the time so I think the value is not recognised or priced in by the market.

[mfd]

Annual report released - looks good although juiced by the sale of the Frankton saleyards. ALF now have a large war chest looking for opportunities to use up their tax losses.

https://www.nzx.com/announcements/436768

[golden city]

We should have a nice acquisition very soon with that much cash

[beetills]

We should have a nice acquisition very soon with that much cash

what type of aquisition do you think they have in mind???

[mfd]

what type of aquisition do you think they have in mind???

Probably some kind of profitable rural service business, anything that plays to their strengths and helps them chew through tax losses (while generating money towards the next acquisition)

[golden city]

Hopefully something earnings accretive that help we growing faster and more