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Trans-Tasman imputation for companies

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Trans-Tasman imputation for Australian companies

To avoid double taxation on some Trans-Tasman investments, Australian companies can maintain an ICA in New Zealand. Companies that do this are called Australian imputation credit account companies. They can pass imputation credits on to their shareholders for New Zealand tax that has been paid.

Australian imputation credit account companies must meet all the New Zealand domestic, administrative and legislative requirements for imputation.

Eligibility

Australian companies and unit trusts can elect to maintain a New Zealand ICA if:

  • they are ‘resident in Australia’, according to the New Zealand residence rules but with application to Australia
  • they are not treated under a double taxation agreement as a resident in a country other than Australia or New Zealand
  • they meet the New Zealand eligibility criteria for keeping an ICA (except residency).

If the company is part of a wholly owned group, all the companies in this group will be jointly liable for any further income tax, penalties and interest incurred.

Making an election

The Australian company must elect to maintain an ICA in New Zealand at least 30 days before it pays a dividend that includes a New Zealand imputation credit. For all other purposes, the election is backdated to the beginning of the tax year.

Australian companies that want to maintain a New Zealand ICA can register online through myIR, or complete a Trans-Tasman imputation election form (IR488).

If the Australian company is not already a New Zealand taxpayer, an IRD number will be issued for the maintenance of the ICA.

Trans-Tasman imputation for New Zealand companies

The Australian government have passed reciprocal laws. New Zealand companies considering electing into the Australian franking system should visit the Australian Tax Office (ATO) website.