Excess imputation credits carried forward.

I am about to turn 63 and have a low income mainly derived from my share portfolio dividends and some schedular payment work.
In my last IR3 IRD return I had for the first time "excess imputation credits carried forward"
It appears that that these can be used against future income to decrease my tax liability, and not for anything else.
In my case it is most likely that I will have more surplus imputation credits this year to add to the current ones.

When I reach 65 and receive the pension, would I be able to start writing the excess credits off against my pension income?
I have been told by the IRD that when I die the credits will be used in my final summary of finances or if they still exist after that they will cease to exist.
It almost seems a waste not to use them up somehow.

Cheers in advance.

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Originally Posted by kerryo

I am about to turn 63 and have a low income mainly derived from my share portfolio dividends and some schedular payment work.
In my last IR3 IRD return I had for the first time "excess imputation credits carried forward"
It appears that that these can be used against future income to decrease my tax liability, and not for anything else.
In my case it is most likely that I will have more surplus imputation credits this year to add to the current ones.

When I reach 65 and receive the pension, would I be able to start writing the excess credits off against my pension income?
I have been told by the IRD that when I die the credits will be used in my final summary of finances or if they still exist after that they will cease to exist.
It almost seems a waste not to use them up somehow.

Cheers in advance.

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Welcome to the club kerryo. I'm in the same boat.My understanding is they can only be used if your entity produces a profit .This would be from other sources so as I'm now unlikely to produce this they will go unused,agggh!

Could consider switching out of some dividend paying shares and into interest bearing or non-div paying. If the latter, sell off some as cash is needed and no capital gains tax to pay. (Yet.)

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Originally Posted by artemis

Could consider switching out of some dividend paying shares and into interest bearing or non-div paying. If the latter, sell off some as cash is needed and no capital gains tax to pay. (Yet.)

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Thanks artemis, you have got the dry matter working now. I could lend some money to one of my children getting them to pay interest on the loan, I'll pay tax on the interest, then write the imputation credits of against the tax. Or is that flawed in some way? :)

You should speak to an accountant about this matter.

What you are short of is gross taxable income. Getting the pension will help. If you have cash invested with banks then make sure it is term investment (taxable) rather than a term fund which is PIE income and does not get included of tax return. You will need to reassess this when you get the pension.

Another way is to buy some shares you like that have none or very little imputation credits. I use RYM and SUM for this purpose. Then you have more income to declare.

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Originally Posted by Investor

You should speak to an accountant about this matter.

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It not that difficult to work it out.

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Originally Posted by 777

What you are short of is gross taxable income. Getting the pension will help. If you have cash invested with banks then make sure it is term investment (taxable) rather than a term fund which is PIE income and does not get included of tax return. You will need to reassess this when you get the pension.

Another way is to buy some shares you like that have none or very little imputation credits. I use RYM and SUM for this purpose. Then you have more income to declare.

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Thanks 777. :)

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Originally Posted by 777

It not that difficult to work it out.

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Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.

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Originally Posted by Investor

Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.

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I think of it as more a sharing of knowledge.

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Originally Posted by Investor

Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.

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It's not compulsory.

Assuming you get withholding tax deducted from your scheduler payment work and your tax affairs are in order you can apply for an exemption certificate from IRD to give to your employer/client so they stop deducting tax. Then you can fully use the imputation credits but might also end up with a bit of tax to pay at the end of the year as it has not been deducted at source.

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Originally Posted by Aaron

Assuming you get withholding tax deducted from your scheduler payment work and your tax affairs are in order you can apply for an exemption certificate from IRD to give to your employer/client so they stop deducting tax. Then you can fully use the imputation credits but might also end up with a bit of tax to pay at the end of the year as it has not been deducted at source.

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Thanks Aaron, IRD neglected to tell me that when I rang to discuss the situation.

This might be useful
https://www.ird.govt.nz/payroll-empl...es-wt-coe.html

Or you could reduce your withholding tax rate so you don't end up with a big tax bill at the end of the year, you just have less tax deducted at source.
https://www.ird.govt.nz/forms-guides...ntractors.html

If looking at companies that don't pay a divvy, Xero has announced it is close to profit and intends to use it for growth.

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Originally Posted by kerryo

I am about to turn 63 and have a low income mainly derived from my share portfolio dividends and some schedular payment work.
In my last IR3 IRD return I had for the first time "excess imputation credits carried forward"
It appears that that these can be used against future income to decrease my tax liability, and not for anything else.
In my case it is most likely that I will have more surplus imputation credits this year to add to the current ones.

When I reach 65 and receive the pension, would I be able to start writing the excess credits off against my pension income?
I have been told by the IRD that when I die the credits will be used in my final summary of finances or if they still exist after that they will cease to exist.
It almost seems a waste not to use them up somehow.

Cheers in advance.

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Imputation credits may be useful if a CGT is brought in

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Originally Posted by kiora

Imputation credits may be useful if a CGT is brought in

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Assuming that with excess imputation credits, an effective 'tax prepayment for a future year' is capable
of transfer & offset. As tax effectively paid by the company paying dividend, I wouldn't be too sure
of chances of that..

Happen to notice that when company tax rates decreased from 33% to 28% - the 33% in either or combination
of imputation credits & Div Withholding tax didn't similarly reduce to 28% for company distributions paid out?

PIE Companies dividends however were just fine with the lower 28% top PIR rate- no problem in the interim .. ;)

X number of years later it still hasn't been fixed & with top tier taxpayers getting shafted harder in near future
on over $180k pa - it looks like DWT/Imputation credit coverage wont be fixed / lowered any time soon either
to 28% .. ;)

Thanks for the clarification nztx