Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
OB 62: Retrospective attachment of imputation credits
or “Adding tax credits to dividends after they've been paid”
You could also call this:

“Rules for imputation credits on certain Australian dividends”

You can’t add an imputation credit to a dividend if the dividend is paid under Australian tax law, it’s part of a debt under that law, and it’s included in the company’s Australian tax return.

This rule doesn’t apply to shares issued before 21 July 2005 in two cases. First, when you and the company aren’t in the same group of companies. Second, when you and the company are in the same wholly-owned group but don’t live in New Zealand.

There’s another exception for shares issued before 21 July 2005. It applies when you and the company are in the same group, and you got the share for specific reasons. These reasons include being part of a sharebroking business, an investment for an insurance business, security for a loan in a money-lending business, or as a trustee for someone who isn’t in your company group. It also applies if you didn’t get the share just because you and the company were in the same group.

When talking about not being able to add an imputation credit to a dividend, this refers to section OB 60(1).

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: OB 64: Replacement payments

or “How to add imputation credits to replacement payments when borrowing shares”
Next

Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 63Australian dividends

  1. Despite section OB 60(1), an ICA company must not attach an imputation credit to a dividend if—

  2. the Income Tax Assessment Act 1997 (Aust) applies to the payment of the dividend by the company; and
    1. the dividend is paid in relation to a share that is, or forms part of, a debt interest under that Act; and
      1. the payment of the dividend is included in the company’s return of income to the Australian Federal Commissioner of Taxation.

        1. Subsection (1) does not apply in relation to a share issued before 21 July 2005 if, when the dividend is paid, the shareholder and the ICA company—

        2. are not part of the same group of companies:
          1. are part of the same wholly-owned group of companies and not resident in New Zealand.

            1. Subsection (1) does not apply in relation to a share issued before 21 July 2005 if—

            2. the shareholder and the ICA company are part of the same group of companies; and
              1. the shareholder acquired the share—
                1. as part of a sharebroking business:
                  1. as an investment held by the shareholder as part of an insurance business:
                    1. as security for a loan given as part of a business of lending money:
                      1. as a trustee for a beneficiary who is not a company that is part of the same group of companies as the shareholder:
                        1. for a reason that does not include the fact that the shareholder and the ICA company were part of the same group of companies.

                        Compare