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LP 2: Tax credits for supplementary dividends
or “Tax credits for companies paying dividends to certain non-residents and foreign investment PIEs”
You could also call this:

“How a company can use or share its leftover tax credits”

This section explains how a company can use its leftover tax credits. If you have a company (let’s call it Company A) that has extra tax credits from section LP 2, you can use them in different ways.

If Company A is part of a group of companies that are all owned by the same people, it can share its extra credits with another company in the group (let’s call it Company B). Company B can use these credits to pay its taxes for the same year.

If the credits haven’t been used before, Company A can also use them to pay its own taxes from up to four years ago. Or, it can give these credits to Company B to pay taxes from up to four years ago, as long as both companies were in the same group at that time.

If Company A still has credits left after doing this, and they haven’t been used for past years, the credits will be saved for next year’s taxes.

To use these options, Company A needs to tell the tax office (the Commissioner) about it when they file their tax return.

For companies to share credits, they need to be in the same group for the whole year. If one of the companies only existed for part of the year, they need to be in the same group for as long as they both existed.

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Next up: LP 4: Continuity rules for carrying credits forward

or “Rules for companies to keep using their unused tax credits”
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Part L Tax credits and other credits
Tax credits for supplementary dividends

LP 3Use of remaining credits

  1. This section applies when a company (company A) has a tax credit arising under section LP 2 remaining for a tax year (the current year) under section LA 5(3) (Treatment of remaining credits).

  2. If company A belongs to a wholly-owned group of companies for the income year corresponding to the current year, company A may make an amount of the tax credit available, for satisfying an income tax liability for the current year, to another company (company B) that belongs to the wholly-owned group for the corresponding income year.

  3. If an amount of the tax credit has not previously been carried forward or back from a tax year under this section, company A may carry the amount back and—

  4. use the amount to satisfy an income tax liability for a tax year in the period of 4 tax years before the current year; or
    1. make the amount available, for satisfying an income tax liability for a tax year in the period of 4 tax years before the current year, to another company that belongs to the same wholly-owned group as company A for the income years corresponding to the current year and the tax year in which the amount is used.

      1. If company A has an amount of the tax credit remaining for the current year after applying subsections (2) and (3), and the amount has not been previously carried back under subsection (3), the amount is carried forward under section LA 5(3) to the tax year following the current year.

      2. The company makes a choice under subsection (2) or (3) by notifying the Commissioner in their return of income for the income year that corresponds to the tax year.

      3. For the purposes of subsections (2) and (3), the company and company B must be part of the same wholly-owned group of companies for the whole of the relevant income year or, if 1 of the companies exists for only part of the year, for the whole of the period of the income year when both companies are in existence.

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      Notes
      • Section LP 3(1) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(1): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(2) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(2): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(3) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(3): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(4) heading: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(4): replaced (with effect on 1 April 2008 and applying for the 2008–09 and later tax years), on , by section 163(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section LP 3(5): amended (with effect on 1 April 2008), on , by section 344(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).