Current Rules regarding Imputation Credits for Dual resident companies of Australia New Zealand 

NZ resident companies must maintain an Imputation credit account (ICA). Australian businesses may also decide to keep an ICA as long as they have made that decision in consultation with and notified the Commissioner of IRD. This requirement can result in an NZ company losing its ICA credit balance if it becomes Australian tax resident before the election is made.

Proposed Amendments 

The suggested changes would convert NZ resident companies’ businesses into Australian ICA entities without requiring them to go through the election procedure.

The company will still be required to maintain an ICA after it becomes an Australian ICA company. The proposed section OB 2(3B) would make sure that any accumulated imputation credits and the company's ICA balance from the time it became an Australian company are both kept.

As the shareholding will remain the same before and after it becomes a non-resident company with Australia, these credits are retained and will be usable in the future. This is because they have borne the tax that is responsible for the imputation credits.

The proposed amendments would also allow an Australian ICA company to preserve its ICA balance if the company’s residence was to revert to New Zealand.

If a company with a New Zealand address becomes tax resident in a nation other than Australia, these changes would not be applicable.

Imputation Groups

The proposed amendments also affect the eligibility requirements for imputation groups. With this modification, the prerequisite that a company has to be elected to be an Australian ICA company would no longer be necessary in order for it to be a member of an imputation group.

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