Companies can attach up to 28 cents of imputation credit to each $1 of gross dividend they pay their shareholders.
This is called the maximum imputation ratio. It makes sure that the imputation credits attached to a dividend are not higher than the tax the company paid on the profits the dividend came from.
The maximum imputation ratio is written using the format ‘28:72’. This shows that 28 cents of credit are attached to each 72 cents of profit.
This is the same as attaching 38.89 cents of imputation credit to each $1 share of net profit after tax.
For more information, check out our Imputation guide for New Zealand companies - IR274.