Imputation Credit Expansion

August 19, 2008 New Zealand Taxation  No comments

The New Zealand Government has released discussion documents which call for comment on the current system, proposal for change, and invitation for system suggestions.

Current imputation credit regulation allows for New Zealand shareholders to offset their income tax obligation with imputation credits attached to the dividends they receive from a New Zealand income tax paying company. These rules do not currently extend to tax-exempt entities or charities, as they have no income tax obligation which needs to be offset. As this means that unutilized imputation credits are effectively wasted when dealing with tax-exempt entities, there have been numerous calls for revisal of the system.

The New Zealand Government has not ruled out the possibility of imputation credit refunds for tax-exempt entities and charities. While not a definite indicator of change, this is still the initial stage to possible future imputation credit system rethinks.