RE 15Bonus issues in lieu and shares issued under profit distribution plans

1. This section applies when a person makes a payment of resident passive income that consists of a dividend that is—

2. a bonus issue in lieu:
3. a share issued under a profit distribution plan.

4. The amount of tax for the payment is calculated using the formula—

   $(tax\; rate\; \times \; (alternative\; amount\; +\; tax\; paid\; or\; credit\; attached))\; -\; tax\; paid\; or\; credit\; attached.$

   Where:

5. In the formula,—

6. tax rate is the basic rate set out in schedule 1, part D, clause 5 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):
7. alternative amount is, as applicable,—
   1. the net amount of money offered as an alternative to the bonus issue before the amount of tax is determined; or
   2. for a share issued under a profit distribution plan, the net amount offered by the company for the reacquisition of the share before the amount of tax is determined:
8. tax paid or credit attached is the total of the following amounts:
   1. if the dividend is paid in relation to shares issued by an ICA company, the amount of an imputation credit attached to the dividend:
   2. if the dividend is paid in relation to shares issued by a company not resident in New Zealand, the amount of foreign withholding tax paid or payable on the amount of dividend.