Section FM 27 — Income Tax Act 2007: Refunds of FDP

FM 27 Refunds of FDP When this section applies (1) This section applies when a company becomes entitled in a tax year to a refund of a FDP paid by it to the Commissioner in an earlier tax year in relation to a foreign dividend received when the company was part of a consolidated group. Maximum amount of refund (2) The refund must not be more than the amount set out in the following paragraphs, as applicable: (a) if the consolidated group has an FDP account at the time the entitlement arises, a credit balance in the group’s FDP account at the end of the tax year that is before the tax year in which the entitlement arises; or (b) if the consolidated group does not have an FDP account at the time the entitlement arises, a credit balance in the group’s imputation credit account at the end of the tax year that is before the tax year in which the entitlement arises. Treatment of excess (3) If subsection (2) does not apply to some or all of the payment because it is more than the applicable credit balance, the amount in excess is credited to FDP payable by the company for a tax year in which it is part of the consolidated group. Earlier refunds of payments (4) The credit balance referred to in subsection (3) is treated as reduced by an earlier refund of FDP that is made in the tax year to the company or to another company in the same consolidated group at the time the dividend is paid or for the income year in which the refund is made. Refunds of income tax (5) Subsection (4) also applies in relation to a refund of income tax that is, under sections RM 13 to RM 17 (which relate to limit on refunds) no more than the credit balance described in subsection (2). Relationship with section RM 18 (6) This section overrides section RM 18 (Limits on refunds related to foreign dividends). However, section RM 18 does not limit a refund of FDP to a company that is part of a consolidated group at the time the dividend is paid to the extent to which this section would not have limited the refund. Defined in this Act: amount , Commissioner , company , consolidated group , FDP , FDP account , foreign dividend , imputation credit account , income tax , pay , tax year , Compare: 2004 No 35 s NH 5(5), (6), (8)