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Income Tax Act 2007

Tax credits and other credits - Tax credits for imputation credits

LE 1: Tax credits for imputation credits

You could also call this:

“Credits for tax already paid on company profits included in your income”

You can get a tax credit if your income includes an imputation credit. The amount of the tax credit is equal to the imputation credit plus any credit carried forward from previous years.

If you invest in a multi-rate PIE and have an imputation credit attributed to you, you can get a tax credit equal to that imputation credit.

When you borrow shares in a returning share transfer, you don’t get a tax credit for imputation credits on dividends from those shares. However, if you lend shares in a returning share transfer, you can get a tax credit for the imputation credit recorded in the credit transfer notice. This doesn’t apply if you’re related to the borrower or if it’s part of a structured arrangement.

The amount of your tax credit might change if certain other rules apply.

If you have income from a FIF (Foreign Investment Fund) that would normally not be taxable, it’s treated as if it were taxable income for this tax credit.

Your tax credit can be cancelled if certain anti-avoidance rules apply. These rules stop people from using imputation arrangements to get unfair tax advantages.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518026.

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Part L Tax credits and other credits
Tax credits for imputation credits

LE 1Tax credits for imputation credits

  1. A person whose assessable income for an income year includes an imputation credit has a tax credit for the tax year corresponding to the income year of an amount equal to the sum of the amount of the imputation credit and any credit carried forward from an earlier tax year. Section OZ 11 (Tax credits for imputation credits) may apply to modify this section.

  2. An investor in a multi-rate PIE who has an imputation credit attributed for use under section HM 54 (Use of tax credits other than foreign tax credits by investors) has a tax credit for the tax year of an amount equal to the amount of the imputation credit.

  3. For a returning share transfer, a share user does not have a tax credit for an imputation credit attached to a dividend derived in a period in which they hold a share acquired under the transfer. However, a person providing a share under a returning share transfer is allowed a tax credit for the amount of an imputation credit recorded in the credit transfer notice, see section LE 7 except if the person is related to the share user or the returning share transfer is a structured arrangement, see section FH 4(5) (Receipts under financial instruments producing deduction without income).

  4. The amount of the person’s credit in subsection (1) may be reduced or increased if any of sections LE 4 to LE 10 apply.

  5. Repealed

  6. For the purposes of this section, an amount that would, in the absence of section EX 59 (Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method), be income of a person from an attributing interest in a FIF is treated as if it were assessable income of the person.

  7. A person’s credit under this section is extinguished if any of the following sections apply:

  8. section GB 36 (Reconstruction of imputation arrangements to obtain tax advantage):
    1. section GB 37 (Arrangements for payment of dividend by other companies):
      1. section GB 38 (When sections GB 35 to GB 37 apply to consolidated groups).

        Compare
        Notes
        • Section LE 1(1): amended, on , by section 154 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
        • Section LE 1(1): amended (with effect on 1 April 2008), on , by section 324(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1(1B) heading: substituted, on (applying for the 2010–11 and later income years), by section 324(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1(1B): substituted, on (applying for the 2010–11 and later income years), by section 324(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1(2): amended, on , by section 45(1) (and see section 45(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
        • Section LE 1(4) heading: repealed (with effect on 1 April 2008), on , pursuant to section 324(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1(4): repealed (with effect on 1 April 2008), on , by section 324(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1(4B) heading: inserted, on , by section 441(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section LE 1(4B): inserted, on , by section 441(1) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section LE 1 list of defined terms attributing interest: inserted, on , by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section LE 1 list of defined terms FIF: inserted, on , by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section LE 1 list of defined terms income: inserted, on , by section 441(2) of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section LE 1 list of defined terms multi-rate PIE: inserted, on , by section 324(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1 list of defined terms portfolio tax rate entity: repealed, on , by section 324(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
        • Section LE 1 list of defined terms related: inserted, on , by section 45(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
        • Section LE 1 list of defined terms structured arrangement: inserted, on , by section 45(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).