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  • repealed
  • Income Tax Act 2004: repealed, on 1 April 2008, by section ZA 1(1) of the Income Tax Act 2007 (2007 No 97).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

(1)

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

(a)

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

(ab)

the amount of any dividend withholding payment credit attached to a dividend that is paid to the company during the imputation year, if the dividend withholding payment 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 dividend withholding payment account that the company elects in accordance with section MG 7 is to be a credit to the company’s policyholder credit account:

(c)

any amount forming all or part of an end of imputation year credit balance in the account that the company elects in accordance with section MG 11 is to be a credit to the imputation credit account of the company or of an imputation group to which the company belongs:

(ca)

the amount of a credit transferred to the company’s conduit tax relief account under section MI 6(1):

(d)

the amount of a refund of dividend withholding payment paid to the company except—

(i)

to the extent that the refund is for a dividend withholding payment paid prior to the date that a debit arises under paragraph (i); and

(ii)

a debit does not arise for a refund paid under section MI 11:

(e)

the amount of any credit of tax refunded to the company under section LD 8(1)(c):

(f)

the amount of any allocation deficit debit arising in the account under section MG 8(4):

(g)

the amount of any allocation deficit debit arising in the account under section MG 8B:

(h)

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

(i)

the amount of any particular credit in the company’s dividend withholding payment 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%:

(j)

the amount of the credit balance, if any, of the dividend withholding payment account where, during the imputation year, the company ceases to be a dividend withholding payment account company:

(k)

the amount of any overpaid dividend withholding payment that the Commissioner applies in satisfaction of an amount (other than dividend withholding payment) 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 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.

(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 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 MG 7:

(c)

in the case of a debit referred to in subsection (1)(c), at the end of the imputation year in which there was the credit balance:

(ca)

in the case of the debit referred to in subsection (1)(ca), immediately before the end of the imputation year:

(d)

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

(e)

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

(f)

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

(g)

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

(h)

in the case of a debit referred to in subsection (1)(j), immediately before the company ceases to be a dividend withholding payment account company:

(i)

in the case of a debit referred to in subsection (1)(k), on the date that the Commissioner applies the relevant amount in satisfaction of the other amount that is due and payable.

(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 a dividend withholding payment 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 dividend withholding payment liability giving rise to the dividend withholding payment account credit; or

(b)

held (directly or indirectly) such rights at the time of the event giving rise to the dividend withholding payment 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 that period; and

(b)

section MG 3(2)(b) does not apply and any credit in the company’s dividend withholding payment 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 dividend withholding payment 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 dividend withholding payment 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 394ZW(1)(f) of the Income Tax Act 1976 as that paragraph applied before its repeal and replacement by section 57 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.

Compare: 1994 No 164 s MG 5

Subsection (1)(ab) was inserted, as from 1 July 2006, by section 153(1) Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).

Subsection (1)(c) was amended, as from 1 October 2005, by section 240(1) Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (2004 No 111) by substituting “imputation credit account of the company or of an imputation group to which the company belongs” for “company’s imputation credit account” with application as from the 2005–06 income year.

Subsection (1)(e) was amended, as from 1 April 2005, by section 79 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 (1)(f) was amended, as from 1 October 2005, by section 240(2) Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (2004 No 111) by substituting “section MG 8(4)” for “section MG 8” with application as from the 2005–06 income year.

Subsection (1)(g) was amended, as from 1 October 2005, by section 240(3) Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (2004 No 111) by substituting “section MG 8B” for “section MG 8(5)” with application as from the 2005–06 income year.

Subsection (2)(ab) was inserted, as from 1 July 2006, by section 153(2) Taxation (Depreciation, Payment Dates Alignment, FBT, and Miscellaneous Provisions) Act 2006 (2006 No 3).