Most Māori authorities need to set up a Māori authority credit account (MACA) to keep track of their tax activity. MACAs record income tax paid and credits available for members. Māori authorities that do not need a MACA are those:
- whose rules do not allow it to distribute its income or property to members
- that only get exempt income within a wholly owned group (except for certain types of dividends).
What MACAs record
The account records Māori authority activity from 1 April to 31 March regardless of an authority’s balance date. The account details an opening balance, credit or debit entries and the closing balance.
The opening balance of a MACA is the same as the previous year’s closing balance. This may be a debit or credit amount. New Māori authorities start with an opening balance of nil.
If the closing balance is a credit, the Māori authority can use the credits in following years. A debit closing balance means further income tax is required. This tax needs to be paid by 20 June. A 10% Māori authority distribution penalty tax will also need to be paid.
Credit entries
These entries increase the credits available to members. Credit entries are recorded as dollar amounts. They can be:
- further income taxes paid to reduce a previous year’s closing debt balance
- Māori authority credits attached to distributions received from other Māori authorities
- imputation credits attached to a dividend that the Māori authority receives
- overturned adjustments made to offset previous debt we allocated
- resident withholding taxes deducted from income that the Māori authority receives
- foreign dividend payment (FDP) credits attached to dividends received by Māori authorities that do not have a FDP account.
Credit entries may also be income tax paid to meet provisional tax requirements or tax liability. There are exceptions for income tax that:
- would have been payable had the MACA year ended the day before the Māori authority was formed
- was paid using credits the Māori authority already held in its MACA, received as income from another Māori authority
- is further income tax credited against any tax that happens after the payment of further income tax
- is an allocation of any overpayment of provisional tax by a Māori authority.
Debit entries
These entries reduce the credits available to members. Debit entries are recorded as dollar amounts that are:
- Māori authority credits attached to distributions paid to members
- overpaid provisional tax used to satisfy tax of another wholly owned Māori authority
- allocation debits that may have arisen from using an incorrect credit ratio
- adjustments for when a shareholding change of more than 34% has happened
- overpaid income tax for liabilities other than income tax or provisional instalments
- apportions of income tax for days the organisation was a Māori authority
- amounts equal to the credit balance immediately before the Māori authority ceases
- adjustments for when we consider arrangements have been made for tax advantage
- adjustments made to remove unused credit after loss of membership continuity
- refunds of FDP paid to Māori authorities that are not foreign dividend account companies.
Debt entries may also be income tax refunds received during the year, except where the refund relates to:
- an income year where the authority did not maintain a MACA
- a part of a year where the authority did not operate a MACA.