Section OB 71 — Income Tax Act 2007: Imputation additional tax on leaving wholly-owned group

OB 71 Imputation additional tax on leaving wholly-owned group When this section applies (1) This section applies in a tax year when— (a) a company ( company A ) stops being part of a wholly-owned group of companies because of a change in the ultimate owner of the company; and (b) [Repealed] (c) the loss balance carried forward from the previous tax year for companies in the group is more than $1,000,000. Sources of liability (1B) Company A is liable for imputation additional tax under— (a) subsection (2), if the company has a debit balance in the imputation credit account when the ultimate owner of the company changes: (b) subsection (4), if the company has an amount of excess entitlement under subsection (5) when the ultimate owner of the company changes. Liability arising from debit balance (2) At the time company A stops being part of the wholly-owned group, it may choose to reduce or eliminate the debit balance by paying imputation additional tax of an amount no greater than the debit balance but, in dealing with the liability, it may transfer some or all of the debit balance under subsection (3) or choose to use its excess entitlement under subsection (4), or a combination of both. Debit balance (3) Company A may choose to transfer under section OB 44 some or all of a debit balance in the company’s imputation credit account to another company ( company B ) in the same wholly-owned group. An imputation additional tax liability remains for the amount of the debit balance that is not transferred. Liability arising from excess entitlement (4) Company A is liable for an amount of imputation additional tax equal to the amount of the excess entitlement described in subsection (5) reduced, to no less than zero, by the amount of any payment that company A— (a) made as provisional tax or income tax; and (b) chooses to treat as having been paid by company B. Amount of excess entitlement (5) Company A’s excess entitlement at the time it stops being part of the wholly-owned group is 1 of the following amounts: (a) zero, if the credit balance of its imputation credit account at the time is equal to or more than— (i) the amount in the tax pooling account provided by or for the benefit of company A that is more than its liability to pay income tax or provisional tax at the time; or (ii) the entitlement company A would have to a refund under sections RM 2 , and RM 4 to RM 6 (which relate to refunds of excess tax) as if sections RM 13 to RM 17 (which relate to limits on refunds) did not apply; or (b) the total of the amounts referred to in paragraph (a)(i) and (ii) if no credit balance exists at the time; or (c) the excess of the total of the amounts referred to in paragraph (a)(i) and (ii) over the credit balance, if paragraph (b) does not apply. Due date (6) If company A chooses to pay imputation additional tax under subsections (2) and (4), it must pay the amount to the Commissioner no later than the 20th day of the month following the month in which company A stops being part of the group. Joint liability (7) Company A and all companies in the group are jointly liable for a payment of imputation additional tax under subsection (6). A payment of imputation additional tax does not satisfy any other liability of company A or the group. Payment by excess tax (8) Company A, or another company in the wholly-owned group, may choose to apply an excess tax payment to satisfy company A’s liability. Form of election (9) An election under this section must follow the form of an election under section OB 13(5) . However, if subsection (3) or (4) apply to transfer a debit or treat an amount of tax as having been paid, company A must also provide a notice of agreement from company B in relation to the amount of excess tax payment. Defined in this Act: amount , Commissioner , company , excess tax payment , imputation additional tax , imputation credit account , income tax , income tax liability , pay , provisional tax , tax loss , tax pooling account , tax year , ultimate owner , wholly-owned group of companies , Compare: 2004 No 35 s ME 9B Section OB 71(1)(b): repealed (with effect on 1 April 2008), on 6 October 2009, by section 398(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section OB 71(1B) heading: inserted (with effect on 1 April 2008), on 7 September 2010, by section 100(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(1B): inserted (with effect on 1 April 2008), on 7 September 2010, by section 100(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(2) heading: substituted (with effect on 1 April 2008), on 7 September 2010, by section 100(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(4) heading: substituted (with effect on 1 April 2008), on 7 September 2010, by section 100(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(4): substituted (with effect on 1 April 2008), on 7 September 2010, by section 100(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(4)(a): amended (with effect on 1 April 2008), on 6 October 2009, by section 398(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section OB 71(5)(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 398(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34). Section OB 71(6): amended (with effect on 1 April 2008), on 7 September 2010, by section 100(4) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109). Section OB 71(9): amended (with effect on 1 April 2008), on 6 October 2009, by section 398(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).