Maximum permitted ratios

OA 18 Calculation of maximum permitted ratios
When this section applies

(1)

This section applies in relation to an imputation credit and a Maori authority credit, for the purposes of the calculation of—

(a)

an imputation ratio; and

(b)
[Repealed]

(c)
[Repealed]

(d)
[Repealed]

(e)
[Repealed]

(f)

a Maori authority credit ratio.

Maximum permitted ratio

(2)

A dividend or distribution with a credit attached must not have a ratio for the amount of the credit to the amount of the dividend or distribution that is more than the maximum permitted ratio calculated using the formula—

tax rate ÷ (1 − tax rate).

Definition of item in formula

(3)

In the formula, tax rate is—

(a)

for subsection (1)(a) to (e), the basic rate of income tax 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 in which the dividend is paid:

(b)

for subsection (1)(f), the basic rate of income tax set out in schedule 1, part A, clause 7 for the income year in which the distribution is paid.

Relationship with sections OZ 8 and OZ 9

(4)

Sections OZ 8 and OZ 9 (which relate to the calculation of maximum permitted ratios in certain income years) may apply to modify this section.

Defined in this Act: amount, combined imputation and CTR ratio, dividend, imputation credit, income tax, income year, Maori authority credit ratio, maximum permitted ratio, pay, tax year

Compare: 2004 No 35 ss ME 8(1), MG 8(1), MG 10(1), MI 8(1), MK 7(1)

Section OA 18(1): amended, on 1 April 2017, by section 188(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section OA 18(1)(b): repealed, on 1 April 2017, by section 188(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section OA 18(1)(c): repealed, on 1 April 2017, by section 188(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section OA 18(1)(d): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 90(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section OA 18(1)(e): repealed (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 90(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section OA 18(3): substituted (with effect on 1 April 2008), on 7 December 2009, by section 85(1) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).

Section OA 18(4) heading: added, on 1 April 2008, by section 492 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section OA 18(4): added, on 1 April 2008, by section 492 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section OA 18 list of defined terms basic rate: repealed, on 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).

Section OA 18 list of defined terms combined imputation and FDP ratio: repealed, on 1 April 2017, by section 188(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section OA 18 list of defined terms CTR credit: repealed (with effect on 1 July 2011), on 7 May 2012, by section 90(3) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section OA 18 list of defined terms FDP credit: repealed, on 1 April 2017, by section 188(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section OA 18 list of defined terms pay: inserted (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).