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  1. #1
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    Default 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.

  2. #2
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    Quote Originally Posted by kerryo View Post
    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.
    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!

  3. #3
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    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.)

  4. #4
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    Quote Originally Posted by artemis View Post
    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.)
    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?

  5. #5
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    You should speak to an accountant about this matter.

  6. #6
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    Default

    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.

  7. #7
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    Quote Originally Posted by Investor View Post
    You should speak to an accountant about this matter.

    It not that difficult to work it out.

  8. #8
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    Quote Originally Posted by 777 View Post
    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.
    Thanks 777.

  9. #9
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    Quote Originally Posted by 777 View Post
    It not that difficult to work it out.
    Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.

  10. #10
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    Quote Originally Posted by Investor View Post
    Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.
    I think of it as more a sharing of knowledge.

  11. #11
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    Quote Originally Posted by Investor View Post
    Not all of us are as keen in offering financial advice via a forum, which was clearly what was being requested.
    It's not compulsory.

  12. #12
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    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.

  13. #13
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    Quote Originally Posted by Aaron View Post
    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.
    Thanks Aaron, IRD neglected to tell me that when I rang to discuss the situation.

  14. #14
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    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

  15. #15
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    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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