Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

OB 74: Statutory producer boards attaching imputation credits to notional distributions

You could also call this:

“Producer boards can give tax credits on pretend payments to members”

If you’re part of a statutory producer board that deals with income tax, you can choose to give out what’s called an imputation credit. This is like a special bonus that goes with a notional distribution, which is a type of pretend payment. When you do this, the members of your board get a dividend, which is a share of the profits.

You can only do this if you give the distribution to everyone who was a member of your board at some point during the income year. The amount of the imputation credit can be based on different things. It could be based on produce transactions, which are the deals you make with your produce. Or it could be based on the levies that members pay, which are like fees. You can also mix these two methods or use another way if the Commissioner agrees.

If you base it on produce transactions, you use a special maths formula. This formula looks at how much each member paid compared to the total payments from all members. If you base it on levies, you use a different formula. This one looks at how much each member paid in levies compared to the total levies from all members.

The Commissioner can step in and change how the imputation credit is shared out if they think it’s not fair. They’ll look at things like the produce transactions, the levies, and anything else that might be important.

Remember, this is all about making sure everyone gets a fair share of the imputation credit, based on how much they’ve contributed to the producer board.

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 It might be out of date or be missing some parts.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

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518910.

Topics:
Money and consumer rights > Taxes
Previous

OB 73: Statutory producer boards attaching imputation credits to cash distributions, or

“Producer boards can add tax credits to cash payments to members”

Next

OB 75: Statutory producer boards’ notional distributions that are dividends, or

“Dividend payments from producer boards' notional distributions”

Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 74Statutory producer boards attaching imputation credits to notional distributions

  1. A statutory producer board that is an ICA company may choose, for an income year, to attach an imputation credit to a notional distribution, as a result of which a member derives a dividend of an amount calculated under section OB 75(2). Subsections (2) and (8) override this subsection.

  2. A statutory producer board may make an election under subsection (1) only if the distribution is made to all persons who were members of the producer board at a time in the income year.

  3. The producer board may determine that the amount of an imputation credit attached to a notional distribution is based on—

  4. produce transactions, and calculated under subsection (5) for each member; or
    1. members’ levies, and calculated under subsection (7) for each member; or
      1. a combination of paragraphs (a) and (b); or
        1. some other method of determination approved by the Commissioner.

          1. The amount of an imputation credit attached to a member’s distribution that is based on produce transactions is calculated using the formula—

            (member's payment ÷ total payments) × credit attached.

            Where:

            • In the formula in subsection (4),—

            • member’s payments is the total amount of all payments to or by a member for the member’s produce transactions during the income year:
              1. total payments is all payments to or by all members for produce transactions during the income year:
                1. credit attached is the amount of imputation credit attached to the distribution.

                  1. An imputation credit attached to a member’s distribution that is based on members’ levies is calculated using the formula—

                    (member's levies ÷ total levies) × credit attached.

                    Where:

                    • In the formula in subsection (6),—

                    • member’s levies is the total amount of all levies payable by a member to the producer board for the income year:
                      1. total levies is total amount of all levies payable by all members to the producer board for the income year:
                        1. credit attached is the amount of imputation credit attached to the distribution.

                          1. The Commissioner may apply subsections (4) to (7) to determine the amount of the imputation credit to be treated as attached to a member’s distribution if the Commissioner considers that the producer board’s application of subsections (3) to (7) does not result in a fair and reasonable allocation of an amount of imputation credit to a member having regard to—

                          2. the produce transactions of the producer board; and
                            1. the levies payable to the producer board; and
                              1. any other relevant factor.

                                Compare