Originally Posted by
Snoopy
I take issue with one detail of the above explanation. The purpose of the imputation credit system is to ensure that New Zealand income tax is only paid once on company earnings, and not twice when dividends from those earnings end up in shareholders hands. If dividends are not fully tax credited, that is because the said company has not paid NZ tax on a portion, or all, of those earnings. Examples of this are when an NZ company pays some of its tax overseas to an overseas tax authority. Or when a company pays dividends from profits as a result of capital gain (like property revaluations) which are not taxable in NZ at the company level. Thus a dividend that has not been fully imputed means that full NZ income tax has not been paid on those earnings. Any NZ company that has paid full NZ tax on their earnings will pay a fully imputed dividend.
Just because a taxpayer investing overseas is exempt from the FIF regime on their individually owned shares, does not mean they are exempt from tax. They still must pay tax on any dividends received.
SNOOPY