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Income Tax Act 2007

Memorandum accounts - Terminating provisions

OZ 8: Attaching imputation credits: maximum permitted ratio

You could also call this:

“Limit on tax credits a company can add to dividends during special periods”

When a company pays a dividend during a special time called the transitional period, this law applies. It also applies if the company has money in its imputation credit account from when the old company tax rate was used.

If there’s a limit on how much imputation credit the company can add to the dividend, the company can choose to use 30% as the tax rate in their calculations. This rate is used in a formula that figures out the maximum amount of credit allowed.

You can find more information about how to calculate the maximum permitted ratios in section OA 18.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1632271.

Topics:
Money and consumer rights > Taxes
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“How Māori authorities manage tax credits during a transition period”

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“How a company's dividend ratio changes are handled during a transitional period”

Part O Memorandum accounts
Terminating provisions

OZ 8Attaching imputation credits: maximum permitted ratio

  1. This section applies when—

  2. a company pays a dividend in the transitional period; and
    1. the company has a credit balance in its imputation credit account from income, expenditure, memorandum account debits, credits, and balances, refunds, tax, tax credits, transfers, amounts withheld, or other items dealt with, arising, or calculated using an old company tax rate.

      1. If the amount of the imputation credit attached to the dividend is limited by the maximum permitted ratio set out in section OA 18 (Calculation of maximum permitted ratios), the company may choose to treat the item tax rate in the formula in section OA 18(2) as 30%.

      Notes
      • Section OZ 8: added, on , by section 520 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
      • Section OZ 8 heading: amended, on , by section 250(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section OZ 8(1)(b): amended, on , by section 250(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section OZ 8(2): amended, on , by section 250(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section OZ 8(2): amended, on , by section 15 of the Taxation (Budget Measures) Act 2010 (2010 No 27).
      • Section OZ 8 list of defined terms FDP account: repealed, on , by section 250(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section OZ 8 list of defined terms FDP credit: repealed, on , by section 250(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
      • Section OZ 8 compare note: repealed (with effect on 1 April 2008), on , by section 119 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).