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Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

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

You could also call this:

“Dividend payments from producer boards' notional distributions”

When a statutory producer board makes a notional distribution with an imputation credit attached, you as a member receive it as a dividend. The amount of this dividend is calculated using a special formula. This formula takes the amount of the imputation credit attached to your distribution and divides it by the tax rate for companies. It then subtracts the original imputation credit from this result.

You get this dividend on the day the producer board chooses to make the notional distribution. The producer board needs to include details about this dividend when they file their tax return for that year. They also need to keep information that helps the tax office figure out if later distributions are dividends or not.

The producer board has to do a few important things. They must tell the tax office about the dividend when they file their tax return. They also need to keep information that helps determine if future distributions are dividends or not.

There’s a special rule that might change how the dividend amount is calculated. This rule is found in section OZ 15.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518922.

Topics:
Money and consumer rights > Taxes
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OB 74: Statutory producer boards attaching imputation credits to notional distributions, or

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

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OB 76: Statutory producer boards attaching FDP credits, or

“Statutory producer boards can no longer attach FDP credits to dividends”

Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 75Statutory producer boards’ notional distributions that are dividends

  1. A notional distribution to which section OB 74 applies that has an imputation credit attached is a dividend under section CD 13 (Notional distributions of producer boards and co-operative companies) derived by a member.

  2. The amount of the dividend is calculated using the formula—

    (credit attached ÷ tax rate) − credit attached.

    Where:

    • In the formula,—

    • credit attached is the amount of imputation credit attached to the member’s distribution:
      1. tax rate is the basic rate of income tax for companies set out in schedule 1, part A, clause 2 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) for the income year.

        1. The member derives the dividend on the date the statutory producer board chooses under section OB 74 to make a notional distribution.

        2. For the purposes of this section, the producer board must—

        3. include the details of the dividend with the return of income filed for the tax year corresponding to the income year in relation to which the distribution was made; and
          1. retain relevant information to enable the Commissioner to determine whether a later distribution is not a dividend under section CD 26(3) or CD 33(1) (which relate to capital distributions on liquidation or emigration and payments that correspond to notional distributions).

            1. Section OZ 15 (Attaching imputation credits and notional distributions: modifying amounts) may apply to modify subsection (2).

            Compare
            Notes
            • Section OB 75(3)(b): amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
            • Section OB 75(6) heading: added, on , by section 501 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
            • Section OB 75(6): added, on , by section 501 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
            • Section OB 75 list of defined terms basic rate: repealed, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).