Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Income from equity

CD 19: Foreign tax credits and refunds linked to dividends

You could also call this:

“Tax credits and refunds from overseas dividends can increase your dividend amount”

If you get a dividend from another country, and there’s an agreement between New Zealand and that country about taxes, you might get a tax credit there. When this happens, the amount of your dividend goes up by the same amount as the tax credit.

Sometimes, you might get a refund of income tax from a foreign country after you’ve received a dividend from there. This refund is treated like it’s another dividend if two things are true. First, the company that paid you the original dividend was allowed to take the tax off before giving you the dividend. Second, you weren’t personally responsible for paying that tax.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1512588.

Topics:
Money and consumer rights > Taxes
Previous

CD 18: Dividend reduced if foreign tax paid on company’s income, or

“Dividend may be lowered if you've paid overseas tax on the company's income”

Next

CD 20: Benefits of shareholder-employees or directors, or

“Rules for non-cash benefits given to employees who own shares or are directors”

Part C Income
Income from equity

CD 19Foreign tax credits and refunds linked to dividends

  1. If a double tax agreement gives a person a tax credit in a foreign country when they derive a dividend from that country, the amount of the dividend is increased by the tax credit.

  2. When a person who has derived a dividend from outside New Zealand also derives a refund of income tax of a foreign country, the refund is treated as a dividend if—

  3. the company paying the dividend was entitled to deduct the tax from the dividend; and
    1. the person was not personally liable to pay the tax.

      Compare