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Inland Revenue

Tax Policy

Over-crediting of imputation credits in excess of FIF income


(BDO Wellington Ltd)

Section CV 19 of the Income Tax Act 2007 should not include imputation credits already taxed under the FIF rules. Alternatively, section CV 19 should not be enacted at all.


Section CV 19 was recently enacted by the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014. It was part of the amendments designed to address a mismatch arising under the tax rules in relation to imputed dividends paid by Australian companies under the trans-Tasman imputation rules. This mismatch arose because imputation credits were calculated on the basis of the dividend paid but income tax arises only on the foreign investment fund (FIF) income.

Officials agree there is double-counting of imputation credits when the comparative value or deemed rate of return FIF calculation methods are used. Officials agree that section CV 19 should be amended to prevent the double-counting of imputation credits in these cases.


That the submission be accepted, subject to officials’ comments.