Tax on Standard Companies

Question 1

What is a dividend?

Answer 1

Transfer of the vale to SH or associated person

Question 2

What are non-dividends?

Answer 2

Share repurchase
Capital disributions
non taxable bonus issue

Question 3

How is capital treated upon liquidation?

Answer 3

Capital gains are not assessable income upon liquidation, only CG distributed in course of business are income

Question 4

What is an Imputation credit account?

Answer 4

All NZ resident companies must maintain an ICA
Imputation year is always 1 April 31 March
To carry forward ICA (66% SH continuity)

Question 5

What are credits to ICA?

Answer 5

Payments of NZ income tax
RWT
Imputation credits attached to dividends received

Question 6

What are debits to ICA?

Answer 6

Failed SH Continuity
Imputation credits attached to dividends paid
Transfer of tax payments to other taxpayers or tax types

Question 7

How do you work out imputation credits?

Answer 7

Net Dividend x 28/72

Question 8

How do you work out ICs attached?

Answer 8

IC = Gross Dic x 28%

Question 9

When do companies not pay RWT?

Answer 9

Resident company > 66% SH continuity
Dividend exempt income of the recipient
The recipient has RWT exemption certificate

Question 10

RWT formula?

Answer 10

((Net Div + IC attached) x0.33) - IC Attached