RE 14 Non-cash dividends other than certain share issues
When this section applies

(1)

This section applies when a person makes a payment of resident passive income that consists of a non-cash dividend other than—

(a)

a bonus issue in lieu:

(b)

a share issued under a profit distribution plan.

When this section does not apply

(1B)

This section does not apply if,—

(a)

at the same time as making a payment of a relevant non-cash dividend the person also makes a payment of a dividend other than a non-cash dividend; and

(b)

they choose to apply section RE 14B; and

(c)

the requirements of section RE 14B are met.

Calculation of amount of tax

(2)

The amount of tax for the payment that the person must pay under subsection (4) to the Commissioner is calculated using the formula—

(tax rate × dividend paid ÷ (1 − tax rate)) − tax paid or credit attached.

Definition of items in formula

(3)

In the formula,—

(a)

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):

(b)

dividend paid is the amount of the dividend paid before the amount of tax is determined:

(c)

tax paid or credit attached is the total of the following amounts:

(i)

if the dividend is paid in relation to shares issued by an ICA company, the amount of an imputation credit attached to the dividend:

(ii)

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.

(iii)
[Repealed]

Treatment as if amount of tax withheld

(4)

For the purposes of subsection (2), the person must pay to the Commissioner the amount calculated as if it were the amount of tax required to be withheld and paid under the RWT rules.

Defined in this Act: amount, amount of tax, bonus issue in lieu, Commissioner, company, foreign withholding tax, ICA company, imputation credit, non-cash dividend, pay, profit distribution plan, resident in New Zealand, resident passive income, RWT rules, share

Compare: 2004 No 35 s NF 2(1)(c), (2)

Section RE 14 heading: replaced (with effect on 1 October 2012), on 2 November 2012, by section 147(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section RE 14(1): replaced (with effect on 1 October 2012), on 2 November 2012, by section 147(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).

Section RE 14(1B) heading: inserted, on 1 April 2017, by section 267(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section RE 14(1B): inserted, on 1 April 2017, by section 267(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section RE 14(2) formula: replaced (with effect on 1 April 2008 and applying for the 2008–09 and later income years), on 30 June 2014, by section 141(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).

Section RE 14(3)(a) tax rate: amended, on 1 April 2008, by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).

Section RE 14(3)(c)(ii): amended, on 1 April 2017, by section 267(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section RE 14(3)(c)(iii): repealed, on 1 April 2017, by section 267(3) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section RE 14 list of defined terms FDP credit: repealed, on 1 April 2017, by section 267(4) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section RE 14 list of defined terms profit distribution plan: inserted (with effect on 1 October 2012), on 2 November 2012, by section 147(3) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).