The Trans-Tasman Imputation system allows New Zealand (NZ) resident companies to attach Australian franking credits to any dividends they may pay. A company may elect to enter into this regime and once it does so, it must maintain an Australian franking account.
A NZ company must elect into the regime by notifying the Australian Taxation Office (ATO) of its election. The election will remain in force until the NZ resident company revokes this choice, or, the ATO cancels the election.
A NZ resident company can make a distribution which will have both Australian franking credits as well as New Zealand imputation credits attached to the payment.
No – an Australian shareholder in a NZ company that receives an Australian franking credit as well as a NZ imputation credit will only be able to utilise the Australian franking credit.
No – a NZ resident shareholder in a NZ company that receives an Australian franking credit as well as a NZ imputation credit will only be able to utilise the NZ imputation credit.
Any Trans-Tasman imputation credits distributed from NZ resident companies electing into the regime are disclosed in our Tax Reports as Australian franking credits.
Where appropriate, the amount of Trans-Tasman imputation credits distributed from the NZ resident company are included as a narration next to the company name on the Tax Report – Detailed. The narration indicates the dollar amount of Trans-Tasman credits distributed. The individual income tax return label reference is also included in the narration
Clients will need to reduce the amount of franking credits disclosed on the Tax Report – Summary by the amount of any Trans-Tasman Imputation credits received during the year. This means that the Franking Credit amount disclosed on the Tax Report – Summary under Dividends and/or Trust Distributions needs to be reduced by any Trans-Tasman imputation credits disclosed on the Tax Report – Detailed.