A New Zealand (NZ) resident company can make a distribution which will have both Australian franking credits as well as New Zealand imputation credits attached to the payment.
What this means for client tax returns
Clients will need to reduce the amount of franking credits disclosed on the Tax Report – Summary by the amount of any Trans-Tasman Imputation credits received during the year.
This means that the Franking Credit amount disclosed on the Tax Report – Summary under Dividends and/or Trust Distributions needs to be reduced by any Trans-Tasman imputation credits disclosed as narration next to the company name on the Tax Report – Detailed. The narration indicates the dollar amount of Trans-Tasman credits distributed and the individual income tax return label reference.
Can a company enter or exit the Trans-Tasman Imputation system?
An NZ company must elect into the regime by notifying the Australian Taxation Office (ATO) of its election. The election will remain in force until the NZ resident company revokes this choice, or the ATO cancels the election.