How does it work?
Both New Zealand and Australia have a system where tax credits can be given to shareholders when dividends are paid. These are called imputation credits in New Zealand and franking credits in Australia.
The credits are allocated in proportion to the shareholder's ownership of the company. Each country's credits can be claimed only by its residents.
The trans-Tasman imputation system lets Australian resident companies participate in New Zealand's imputation credit system and New Zealand resident companies participate in Australia's franking system.
What is a Trans-Tasman ICA?
An Australian company who distributes dividends to New Zealand shareholders may elect to maintain a New Zealand ICA, in which it keeps track of its New Zealand imputation credits and debits.
If an Australian company elects to maintain a New Zealand ICA, it must observe the same imputation rules as a New Zealand company and it must file an annual imputation return to Inland Revenue.
Find out more
- Trans-Tasman imputation
- Imputation credit account (ICA)
- Trans-Tasman imputation and the company tax rate change
- Imputation guide (IR274)
Date published: 10 Jan 2013