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Income Tax Act 2007

Recharacterisation of certain transactions - Imputation groups of companies

FN 4: Eligibility rules

You could also call this:

“Rules for companies to be part of an imputation group”

You can be part of an imputation group if you’re a company that meets certain rules. These rules say you must:

  1. Live in New Zealand or Australia.
  2. Be part of a group of companies that are all owned by the same people.
  3. Not be treated as living in another country for tax reasons.
  4. Need to keep an imputation credit account (you can check sections OB 1 and OB 2 to see if this applies to you).
  5. Follow special rules if you’re part of a consolidated group.
  6. Be the same type of company as others in the group if you’re a qualifying company or a mineral mining company.

If you’re in a consolidated group, all the companies in your group must follow these rules too. If the imputation group includes companies from more than one consolidated group, they all need to be owned by the same people.

You can’t be part of an imputation group if someone has changed how your company’s shares work just to let you join the group and avoid the imputation rules. This means your shares can’t be part of any special deals or have their rights changed.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516752.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
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FN 3: Liabilities of companies in imputation group, or

“Companies in a tax credit sharing group are jointly responsible for group tax debts”

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FN 5: Imputation groups with reduced numbers, or

“Rules for imputation groups that have fewer companies than before”

Part F Recharacterisation of certain transactions
Imputation groups of companies

FN 4Eligibility rules

  1. A company is eligible to be part of an imputation group at a particular time if, at the time,—

  2. it is resident in New Zealand or resident in Australia; and
    1. it is part of the same wholly-owned group of companies; and
      1. it is not treated under a double tax agreement as resident in a country other than New Zealand or Australia, as applicable, for the purposes of taxation in the relevant country; and
        1. it is required to maintain an imputation credit account (see sections OB 1 and OB 2); and
          1. if it is a company that is part of a consolidated group, it meets the criteria set out in subsection (2); and
            1. if it is a qualifying company or a mining company, it meets the condition set out in subsection (3); and
              1. subsection (5) does not apply to it.

                1. A company that is part of a consolidated group is eligible to be part of an imputation group at a particular time if, at the time,—

                2. all companies in the consolidated group meet the criteria set out in subsection (1) and are part of or would be part of the imputation group; and
                  1. for an imputation group that includes or will include companies from more than 1 consolidated group, the companies in the consolidated groups are part of a single wholly-owned group of companies from the earliest date on which a credit arose and remains uncancelled in the imputation credit account of a consolidated group or an imputation group, all of whose members are, or would be, in the imputation group.

                    1. Despite subsections (1) and (2), if a company that is part of an imputation group is 1 of the following types of company, all companies in the imputation group at the time must be the same type as that company:

                    2. a qualifying company; or
                      1. a mineral miner that is a company.

                        1. Repealed

                        2. A company is not eligible to be part of an imputation group if, for a purpose of enabling a company to be part of an imputation group so as to defeat the intent and application of the imputation rules, the company’s shares—

                        3. are subject to an arrangement or to a series of related or connected arrangements; or
                          1. have rights attaching to them extinguished or altered, either directly or indirectly, by any means.

                            Compare
                            Notes
                            • Section FN 4(1)(d): replaced (with effect on 15 March 2017), on , by section 71 of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                            • Section FN 4(1)(g): amended, on , by section 57 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section FN 4(2)(a): amended, on (with effect on 1 April 2008), by section 106 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                            • Section FN 4(3)(b): replaced, on , by section 73(2) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                            • Section FN 4(4) heading: repealed, on , pursuant to section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section FN 4(4): repealed, on , by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section FN 4 list of defined terms LAQC: repealed, on , by section 172 of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
                            • Section FN 4 list of defined terms mineral miner: inserted, on , by section 73(3)(a) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                            • Section FN 4 list of defined terms mining company: repealed, on , by section 73(3)(b) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).