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Māori organisations: 2012 tax rate reduction
Who is affected by the reduction of the Māori authority tax rate
All Māori authorities will be affected by the change.
When the change takes effect
The change takes effect from the start of your 2012 income year. For most, this is from 1 April 2011.
What aspects of your tax are affected
The change of rate affects your:
- calculation of income tax (including provisional tax)
- allocation and use of Māori authority credits
Calculation of your income tax
All income you receive from the start of your 2012 income year will be taxed at rate of 17.5%.
You need to start using this reduced rate from when you calculate your first 2012 provisional tax payment onward. The specific dates for these depend on your balance date. The rate change affects provisional tax calculations differently depending on whether you are using:
- the standard option (see Provisional tax basics), or
- the ratio option (see Changes to provisional tax).
Māori authority credits
The Māori authority tax rate change also affects Māori authority credit accounts (MACA). Even if the tax payments that generate Māori authority credits are made at the previous rate of 19.5%, those credits might not be distributed until after the new rate has started to apply. This means a set of transitional rules are needed, to cover the changeover to the new rate.
New maximum imputation ratio for a MACA
The new maximum imputation ratio for a MACA is now 17.5:82.5. The transitional rules allow a Māori authority to allocate credits that relate to tax paid at 19.5% at the previous maximum ratio of 19.5:80.5. This prevents any potential disadvantage to your members.
When these rules apply
These rules apply from the start of a Māori authority's 2011-12 income year until 31 March 2013 or until the credits have been used.
After 31 March 2013, the maximum ratio of 17.5:82.5 applies to all distributions, regardless of which tax rate the tax credit relates to.