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LE 9: Application of combined imputation and FDP ratio
or “This provision about tax credits was removed in 2017”
You could also call this:

“What happens to your tax credit if a company doesn't pay its income tax”

You can get a tax credit when a company pays you a dividend with an imputation credit. However, if the company that paid you the dividend hasn’t paid all its income tax, your tax credit might be reduced.

This can happen if the company has a negative balance in its imputation credit account at the end of the tax year. If the company doesn’t pay the extra income tax it owes by the due date, the Commissioner of Inland Revenue might lower your tax credit. The amount they reduce it by depends on how much of the unpaid tax relates to your dividend.

If the company pays the tax they owe after the due date, you might still get your full tax credit. The Commissioner won’t reduce your credit for any amount the company has paid, even if it’s late.

You can find more details about the tax credit in section LE 1, and about the due date for the company to pay its extra income tax in section OB 65(3).

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Next up: LE 11: Evidential requirements

or “You need to provide evidence to support your tax credit claim”
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Part L Tax credits and other credits
Tax credits for imputation credits

LE 10When income tax unpaid

  1. This section applies when—

  2. a person has a tax credit under section LE 1 and an imputation credit is attached to a dividend; and
    1. the dividend is paid by a company that has a debit balance in its imputation credit account at the end of the tax year; and
      1. the company has not paid further income tax by the due date in section OB 65(3) (Further income tax for ICA closing debit balance).

        1. The Commissioner may reduce the person’s credit by an amount equal to their proportion of the unpaid amount under subsection (1)(c).

        2. To the extent to which a company remedies the failure after the due date, this section does not apply.

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