Income Tax Act 2004

  • repealed
  • Income Tax Act 2004: repealed, on 1 April 2008, by section ZA 1(1) of the Income Tax Act 2007 (2007 No 97).
ME 5 Debits arising to imputation credit account

(1)

There arise as debits to be recorded in a company’s imputation credit account for any imputation year the following amounts:

(a)

the amount of any imputation credit attached to a dividend paid by the company during the imputation year:

(ab)

the amount of any imputation credit attached under section ME 6B to a replacement payment paid under a share-lending arrangement by the company during the imputation year:

(ac)

the amount of any imputation credit attached to a dividend that is paid to the company during the imputation year as a share user in a returning share transfer that is not a share-lending arrangement:

(ad)

the amount of any imputation credit attached to a dividend that is paid to the company during the imputation year, if the imputation credit is shown in a credit transfer notice issued by the company:

(b)

in the case of a company carrying on a business of providing life insurance to which the life insurance rules apply, the amount of any credit balance of the company’s imputation credit account which the company elects in accordance with section ME 7 is a credit to the company’s policyholder credit account:

(c)

in the case of any on-market cancellation by the company of a share in the company, the amount (not being less than nil) calculated in accordance with the following formula:

Graphic

where—

a

is the amount distributed upon the on-market cancellation to the extent that it exceeds the available subscribed capital per share calculated under the ordering rule

b

is the rate of resident withholding tax, expressed as a percentage, stated in schedule 14, clause 2 and applying at the time the acquisition occurs:

(d)

the amount of any provisional tax allocated by the company under section MB 33 to an underpaid company (as referred to in that section):

(e)

the amount of any refund of income tax paid to the company during the imputation year except to the extent that—

(i)

the refund is in respect of income tax paid in relation to the 1987-88 or any earlier tax year; or

(ii)

the refund is in respect of income tax paid that was applied in satisfaction of an income tax liability for an income year—

(A)

during which the company was not an imputation credit account company; or

(B)

during only part of which the company was an imputation credit account company, in which case the debit to the company’s imputation credit account is the amount calculated in accordance with the following formula:

Graphic

where—

a

is the number of days in the income year during which the company was an imputation credit account company

b

is the amount of the refund; or

(iii)

the amount of the refund does not exceed the amount of a debit arising under paragraph (i) if—

(A)

the refund is in respect of income tax paid prior to the date that the debit arose; and

(B)

in the case of a refund arising by virtue of subpart LE, the supplementary dividend paid by the company giving rise to the refund was paid before the date that the debit arose under paragraph (i):

(ea)

the amount of any refund that is made to the company by an intermediary from funds in a tax pooling account for which the company has received a credit under section ME 4(1)(ac) or (ad):

(eb)

the amount of the funds involved in any transfer from the company to another taxpayer by an intermediary of an entitlement to funds in a tax pooling account for which the company has received a credit under section ME 4(1)(ac) or (ad):

(f)

the amount of any allocation debit arising in respect of the imputation year under section ME 8(4):

(fb)

the amount of any debit arising in the imputation credit account as a result of an election under section ME 9B(2)(a)(i):

(g)

the amount of any refund of dividend withholding payment paid to the company during the imputation year at a time when the company is not a dividend withholding payment account company:

(h)

the amount of any credit of tax refunded to the company under section LD 8(1)(c) at a time when the company is not a dividend withholding payment account company:

(i)

the amount of any particular credit in the company’s imputation credit account at any time (in this paragraph referred to as the specified time), not being a credit which has before the specified time been cancelled out by a prior or subsequent debit, unless there is a group of persons—

(i)

the aggregate of whose minimum voting interests in the company in the period from the date upon which the credit arose until the specified time is equal to or greater than 66%; and

(ii)

in any case where at any time during that period a market value circumstance exists in respect of the company, the aggregate of whose minimum market value interests in the company in the period is equal to or greater than 66%:

(ia)

the amount of a credit in the company’s imputation credit account arising under section ME 4(1)(ab) if the company’s financial statements are adjusted to reflect an amount attributed in accordance with section GC 14D:

(j)

the amount of any further debit arising to the imputation credit account under section GC 22 in relation to an imputation credit determined to be the subject of an arrangement to obtain a tax advantage:

(ja)

the amount that results from multiplying the basic rate of income tax, expressed as a percentage, stated in schedule 1, part A, clause 5 by the amount of expenditure transferred by the company, being a member fund, to a master fund in accordance with sections DV 5 to DV 7:

(k)

the amount of credit balance, if any, of the imputation credit account where, during the imputation year, the company ceases to be an imputation credit account company:

(ka)

the amount of credit balance of the imputation credit account if, during the imputation year, the company establishes a Maori authority credit account:

(l)

the amount of any overpaid income tax that the Commissioner applies towards the satisfaction of an amount (other than an income tax liability or an instalment of provisional tax) that is due and payable under any provision of this Act or any other of the Inland Revenue Acts, except to the extent that the amount applied—

(i)

is in respect of income tax paid before the date that a debit arises under paragraph (i); and

(ii)

does not exceed the amount of the debit that arises on that date:

(m)

the amount of any overpaid dividend withholding payment that the Commissioner applies, at a time when the company is not a dividend withholding payment account company, towards the satisfaction of an amount (other than a dividend withholding payment or an income tax liability or an instalment of provisional tax) that is due and payable under this Act or any other of the Inland Revenue Acts:

(n)

the amount of any overpaid income tax or dividend withholding payment that the Commissioner applies, at a time when the company is not a dividend withholding payment account company, in satisfaction of income tax that is due and payable in respect of the 1987-88 or any earlier tax year, except to the extent that the amount applied—

(i)

is in respect of income tax or dividend withholding payment paid before the date that a debit arises under paragraph (i); and

(ii)

does not exceed the amount of the debit that arises on that date:

(o)

the amount calculated under subsection (6) or (7) for an income year and transferred to the company’s dividend withholding payment account on account of net foreign attributed income.

(1A)

There arise as debits to be recorded by an Australian imputation credit account company in the imputation credit account of the company for any imputation year the following amounts:

(a)

any refund arising from an amount—

(i)

that is an overpayment of non-resident withholding tax on non-resident withholding income; and

(ii)

for which the company has received a credit under section ME 4(1B)(a):

(b)

any refund arising from an amount—

(i)

that is an overpayment of tax under the Income Tax (Withholding Payments) Regulations 1979 from a withholding payment made to the company as a non-resident contractor; and

(ii)

for which the company has received a credit under section ME 4(1B)(b):

(c)

any refund of tax arising from an amount—

(i)

that is an overpayment of the company’s schedular income tax liability for schedular income that the company derived under any of sections FC 13, FC 14, FC 18, and FC 21 in the income year corresponding to the imputation year; and

(ii)

for which the company has received a credit under section ME 4(1B)(c).

(2)

The debits referred to in subsection (1) arise,—

(a)

in the case of a debit referred to in subsection (1)(a), on the date the dividend is paid:

(ab)

in the case of a debit referred to in subsection (1)(ab), on the date the replacement payment is paid:

(ac)

in the case of a debit referred to in subsection (1)(ac) or (ad), on the date the relevant dividend is paid:

(b)

in the case of a debit referred to in subsection (1)(b), on the date the company makes the election in accordance with section ME 7:

(c)

in the case of a debit referred to in subsection (1)(c), on the date the acquisition occurs:

(d)

in the case of a debit referred to in subsection (1)(d), on the date the company gives to the Commissioner notice of the allocation of tax under section MB 33:

(e)

in the case of a debit referred to in subsection (1)(e) or (h), on the date the refund is paid:

(ea)

in the case of a debit referred to in subsection (1)(ea) or (eb) arising for a qualifying company, on the date on which the refund or transfer is made:

(eb)

in the case of a debit referred to in subsection (1)(ea) or (eb) arising for a company that is not a qualifying company,—

(i)

on the last day of the imputation year that immediately precedes the imputation year in which the refund or transfer is made, to the extent that the debit does not exceed the credit balance in the company’s imputation credit account on that date:

(ii)

on the date on which the refund or transfer is made, to the extent that, after the application of subparagraph (i), the amount of the debit that is not assigned a date under subparagraph (i) does not exceed the credit balance in the company’s imputation credit account on the date of the refund or transfer:

(iii)

on the last day of the imputation year that immediately precedes the imputation year in which the refund or transfer is made, to the extent that the debit is not assigned a date under subparagraphs (i) and (ii):

(f)

in the case of a debit referred to in subsection (1)(f), at the end of the imputation year in respect of which the allocation debit arises:

(fb)

in the case of a debit referred to in subsection (1)(fb), on the date on which the leaving company ceases to be a member of the wholly-owned group of companies:

(g)

in the case of a debit referred to in subsection (1)(g), on the date the refund is paid:

(h)

in the case of a debit referred to in subsection (1)(i), at the specified time referred to in that paragraph:

(ha)

in the case of a debit referred to in subsection (1)(ia), on 31 March of the income year in respect of which the company’s financial statements are adjusted:

(i)

in the case of a debit referred to in subsection (1)(j), at the end of the imputation year in respect of which it is determined under section GC 22 that the arrangement to obtain a tax advantage occurred or commenced:

(ia)

in the case of a debit referred to in subsection (1)(ja), on 31 March in the income year in which the expenditure is transferred:

(j)

in the case of a debit referred to in subsection (1)(k), immediately before the company ceases to be an imputation credit account company:

(ja)

in the case of a debit referred to in subsection (1)(ka), immediately before the company becomes a Maori authority:

(k)

in the case of a debit referred to in subsection (1)(l) or (m) or (n), on the date that the Commissioner applies the amount of overpaid income tax or dividend withholding payment in satisfaction of the amount that is referred to in those paragraphs as due and payable:

(l)

in the case of a debit to which subsection (1)(o) applies,—

(i)

on the last day of the imputation year that corresponds to the income year, to the extent that the debit does not exceed the amount of provisional tax payments made in relation to the income year on or before that day; and

(ii)

to the extent that subparagraph (i) does not apply, on the date the company files the return of income for the income year.

(2A)

A debit referred to in subsection (1A) arises on the date on which the refund is paid.

(3)

Subject always to the express provisions of this Act, subsection (1)(i) is intended to limit the circumstances in which a taxpayer, being a company, may carry forward an imputation account credit for subsequent utilisation to those where the tax benefit arising from such utilisation is obtained or available to be obtained (directly or indirectly), at least to the extent of 66%, only by the same natural persons holding (directly or indirectly) rights in relation to the company who—

(a)

by virtue of holding (directly or indirectly) such rights, bore the tax liability giving rise to the imputation account credit; or

(b)

held (directly or indirectly) such rights at the time of the event giving rise to the imputation account credit.

(4)

For the purposes of subsection (1)(i),—

(a)

in respect of any period referred to in that paragraph, the minimum voting interest or market value interest of any person in the company in the period is equal to the lowest voting interest or market value interest (as the case may be) which that person holds in the company during the period; and

(b)

section ME 3(2)(b) does not apply and any credit in the company’s imputation credit account is treated as continuing to exist until treated as being cancelled out by a prior or subsequent debit in accordance with paragraph (c); and

(c)

in determining whether any credit in the company’s imputation credit account has been cancelled out by any prior or subsequent debit,—

(i)

any amount of debit may be taken into account only once for the purpose of ascertaining whether any credit has been so cancelled out; and

(ii)

the amount of any debit is offset against the amount of any credit in the order in which the credits arise; and

(d)

any credit arising on or before 16 December 1988 is deemed to have been cancelled out by a subsequent debit before the specified time referred to in that paragraph; and

(e)

in the case of any credit arising after 16 December 1988 and before 1 April 1992 (not being a credit cancelled out before 1 April 1992 by a subsequent debit), the credit is deemed first to arise in the company’s imputation credit account on 1 April 1992, but a debit is deemed to arise in accordance with subsection (1)(i) in respect of that credit at any time if and to the extent that, at that specified time, that credit still exists and a debit would have arisen in respect of that credit in accordance with section 394E(2)(g) of the Income Tax Act 1976 as that paragraph applied before its repeal and replacement by section 51 of the Income Tax Amendment Act (No 2) 1992, had that paragraph continued to apply but with the figure “75” omitted and the figure “66” substituted.

(5)

Where—

(a)

a share in a company is acquired by any person (referred to in this subsection as the associated person) associated with the company; and

(b)

the acquisition would have been an on-market cancellation if the associated person had been the company; and

(c)

in the opinion of the Commissioner, the acquisition occurs under an arrangement between the company and the associated person for the associated person to make the acquisition in lieu of the company,—

then, for the purposes of subsections (1)(c) and (2)(c) and section CD 32(22), the acquisition is deemed to be an on-market cancellation by the company.

(6)

If a dividend withholding payment account company is also a conduit tax relief company for the whole of the imputation year corresponding with the income year, and at the time of filing the return, the amount to be transferred under subsection (1)(o) from the company’s imputation credit account to the company’s dividend withholding payment account is calculated by applying sections KH 1 and KH 2 (as if the amount were conduit tax relief for the imputation year) but substituting the percentage of resident shareholders for the quantity NRS in section KH 1(2) and (3) and calculating the percentage of resident shareholders by deducting NRS from 100%.

(7)

If a dividend withholding payment account company for the whole of the imputation year corresponding with the income year is not a conduit tax relief company for the whole of the imputation year corresponding with the income year and at the time of filing the return, the amount to be transferred under subsection (1)(o) is calculated under section KH 1 as if the company were a conduit tax relief company and the quantity NRS were 100%.

(8)

If neither subsection (6) nor (7) applies, no amount is transferred under subsection (1)(o).

Compare: 1994 No 164 s ME 5

Subsection (1)(ab) to (ad) was inserted, as from 1 July 2006, by section 143(1) Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Subsection (1)(ac) was amended, as from 1 July 2006, by section 132(1) Taxation (Savings Investment and Miscellaneous Provisions) Act 2006 (2006 No 81) by omitting “or as a person associated with a share user,” with application as from the 2005–06 income year.

Section ME 5(1)(d): amended, on 1 October 2007, by section 143(2) of the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Subsection (1)(fb) was inserted, as from 1 October 2005, by section 76(1) Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 (2005 No 79) with application as from the 2005–06 income year.

Subsection (1)(h) was amended, as from 1 April 2005, by section 76(2) Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 (2005 No 79) by substituting “section LD 8(1)(c)” for “section LD 8(1)(a)” with application as from the 2005–06 income year.

Subsection (2)(ab) and (ac) was inserted, as from 1 July 2006, by section 143(3) Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Section ME 5(2)(d): amended, on 1 October 2007, by section 143(4) of the Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Subsection (2)(fb) was inserted, as from 1 October 2005, by section 76(3) Taxation (Base Maintenance and Miscellaneous Provisions) Act 2005 (2005 No 79) with application as from the 2005–06 income year.

Subsection (2)(ia) was amended, as from 1 April 2005, by section 143(5) Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3) by substituting “subsection (1)(ja)” for “subsection (1)(jb)” with application as from the income year corresponding to the 2005–06 tax year.