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Income Tax Act 2007

Tax credits and other credits - Tax credits for imputation credits

LE 8: Application of imputation ratio

You could also call this:

“How imputation credits are limited when a dividend's ratio exceeds the maximum”

If you receive a dividend with an imputation credit attached, this section applies when the imputation ratio of the dividend is higher than the maximum allowed ratio. The maximum allowed ratio is calculated under section OA 18.

Your tax credit, which you get under section LE 1, will be reduced. The reduction is equal to the amount that your credit exceeds the maximum permitted ratio. This means you won’t get to keep the full credit if it’s more than what’s allowed.

It’s important to note that section OZ 10 might change how this section works when it comes to modifying ratios for imputation credits.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518056.

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Money and consumer rights > Taxes
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Part L Tax credits and other credits
Tax credits for imputation credits

LE 8Application of imputation ratio

  1. This section applies when a person who has a tax credit under section LE 1 receives an imputation credit attached to a dividend, and the dividend has an imputation ratio greater than the maximum permitted ratio calculated under section OA 18 (Calculation of maximum permitted ratios). Section OZ 10 (Modifying ratios for imputation credits) may apply to modify this section.

  2. The person’s credit is reduced by an amount equal to the amount by which the credit is greater than the maximum permitted ratio.

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Notes
  • Section LE 8(1): amended, on , by section 156 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
  • Section LE 8(1): amended, on , by section 443 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).