FIF Tax Regime - Any Spreadsheets?

[Deev8]

As noted above, CV is zero this year. But can I deduct withholding taxes from FIF investments from my other income?

This year's IR3 and IR3 Guide are quite confusing on this point. The guide says:

After you’ve converted the amounts to New Zealand dollars, add up the overseas tax paid and print the total in Box 17A (Total Overseas Tax Paid).

Based on that you would expect the foreign tax that you have paid to be used as a credit against tax due on your other income. However the guide also says:

... the foreign tax deducted from the dividend can be claimed as a credit against the tax payable on the calculated FIF income

and

If you paid tax overseas you can claim it as a credit against your tax. The amount of credit you receive is the lesser of the actual amount of tax paid on the overseas income or the amount of tax you would pay in New Zealand on the same amount of income.

The first statement is saying that the foreign tax that you have paid can only be used to reduce the tax payable on your calculated FIF income, it can't be used to reduce the tax payable on your income arising within New Zealand. Using the CV method the majority will find that their calculated FIF income is zero, so the amount of credit you can claim for the foreign tax that you have paid is also zero.

The second statement seems to confirm that. If the calculated FIF income is zero, then the amount of tax you would pay in New Zealand on the same amount of income would be zero and the amount of credit you can claim for the foreign tax that you have paid is also zero.

If this is the case, then you should actually enter zero in Box 17A of the IR3 rather than the total of overseas tax paid. However it would be good to see something from the IRD to confirm that is the case.