Taxation of PIE income

[justakiwi]

My understanding is that these “bonus” dividend payments are simply a way for them to distribute excess imputation credits. I don’t believe the dividend itself (which is a cancelled dividend) is classed as income, but you can claim the imputation credits on your tax return if you are on a lower PIR.

Someone will correct me if I’m wrong, but that’s how I read it.

I was taken back to see the size of the gross BOT taxable dividend declared last week. This is when bonus shares are issued in order to utilise the accrued imputation credits. Immediately the shares are then cancelled. However, the gross dividend. declared but not paid out, can be sufficient to plunge one into the next tax bracket. This alters the PIR relating to the PIE fund income.

Does anyone else see this as a taxation anomaly?

[Snoopy]

My understanding is that these “bonus” dividend payments are simply a way for them to distribute excess imputation credits. I don’t believe the dividend itself (which is a cancelled dividend) is classed as income, but you can claim the imputation credits on your tax return if you are on a lower PIR.

Someone will correct me if I’m wrong, but that’s how I read it.

There is such a thing as a 'taxable bonus share issue', which can be a way to distribute excess imputation credits to shareholders. As the name implies, this is fully taxable, even if no cash payout comes into your bank account as a result of such bonus shares being issued.

I do not understand your reference to a 'dividend' being a 'cancelled dividend' Justakiwi. Can you please expand on the situation you are talking about?

SNOOPY