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Maori organisations
Nga whakahaere Maori
Maori authority credits: How the credit system works

What is a Maori authority credit?

A Maori authority credit is similar to a company imputation credit. It is income tax paid by the Maori authority that may be passed on to a member by attaching it to a distribution, for the benefit of the member. 

These credits are added to the distribution to calculate gross income to the member. The member receiving the distribution may then claim the Maori authority credits against their income tax liability. 

This system helps stop the double taxation of a Maori authorities distributions by effectively taxing the distribution once - in the Maori authority's income tax return. 

How the credit system works

Maori authorities were previously subject to a dividend withholding tax system that applies up to the end of the 2003 - 04 income tax year.

The credit system applies to all income tax paid from the 2004 - 05 income tax year onwards.

The following example shows how the credit system works.
Example  
Tax on Maori authority
Maori authority profit $1,000
Tax at 19.5% $   195
After-tax profit $   805
Distribution paid to members $   805
Retained earnings       Nil
Tax on shareholder
Distribution received $   805
Maori authority credit $   195
Taxable amount $1,000
Tax at (for example) 19.5% $   195
Less Maori authority credit $   195
Tax payable by member       Nil
Result for member
Cash distribution received $   805
Less tax payable       Nil
Net distribution after tax $   805

 


Date published: 03 Apr 2006

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