IR4GU

September 2020

Company tax
return guide
2020
Use this guide to help you complete
your 2020 income tax and annual
imputation returns.
2 COMPANY TAX RETURN GUIDE

ird.govt.nz
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tools.
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How to get our forms and guides

You can get copies of our forms and guides at
ird.govt.nz/forms-guides

Important changes
New residential property deduction rules (also known as the
ring-fencing rules) apply to most residential rental properties
for the 2019-20 income year, which ends on 31 March 2020 for
most people. The changes include:
• limits to the amount of deductions you can claim if your
residential rental property makes a loss
• inability to offset residential excess deductions/rental
loss against other income. They are now generally carried
forward and offset against future residential property
income
• what happens to excess deductions when disposing of
residential property
• limits on the amount of interest you can claim for an
investment in an entity that rents out residential property.
ird.govt.nz 3

Contents
Page
ird.govt.nz 2
How to get our forms and guides 2

Company returns 5
Income tax return 5
Imputation return 8
Questions
Q 1-8 Company details 8
Q9 Non-resident 9
Q10
and 10A Imputation 9
Q 11 Has the company ceased? 10

Company tax return 11

Questions
Q 12 Schedular payments 11
Q 13 New Zealand interest 12
Q 14 New Zealand dividends 13
Q 15 Māori authority distributions 16
Q 16 Partnership, estate or trust income 17
Q 18 Overseas income 17
Q 19 Income and expenditure from residential property 20
Q 20 Business or other rental income 25
Q 21 Income from taxable property sales/disposals 27
Q 22 Insurance premiums paid to an overseas insurer 28
Q 23 Other income 29
Q 25 Donations 30
Q 27 Net losses brought forward 31
Loss carry-back 32
Q 28 Total income after net losses brought forward 32
Q 29 Net losses and subvention payments 33
Q 31E Foreign investor tax credit 34
Q 31G Imputation credits 35
Q 32 Refunds and/or transfers 35
Q 32B Associated taxpayers 35
4 COMPANY TAX RETURN GUIDE

Q 33 Initial provisional tax liability 37

Q 34 2021 provisional tax 38
Not taking reasonable care penalty 39
Interest 39
Tax pooling 40
Payment dates 40
How to make payments 41
Late payment 41
Q 36 Foreign rights 41
Q 37 Share repurchases 42
Q 38 Foreign-sourced dividends 42
Q 39 Company controlled or owned
by non-residents 43
Q 40 Lowest economic interests of shareholders 43
Q 41 Shareholder details - see also the IR4S 46

Annual imputation return 47

Questions
Q 42 Opening balance 47
Q 43 Credits 47
Q 44 Debits 49
Q 45A Adjustments to debit balance 50
Q 46 Imputation penalty tax 50
Limitations on tax refunds 51
Self-assessment by taxpayers 51
Accident Compensation Act 2001 52

Services you may need 53

Need to speak with us? 53
0800 self-service numbers 53
Postal addresses 53
Privacy 54
If you have a complaint about our service 54
ird.govt.nz 5

Company returns
Income tax return
All companies that are active and New Zealand resident for tax
purposes (except for look-through companies) must file an IR4
income tax return each year, including bodies corporate and
unit trusts.
Look-through companies (LTC) file an IR7 income tax return
each year they're an LTC. For further information about LTCs
refer to our Look-through companies - IR879 guide.
If yours is an Australian company or part of an imputation
group, please see page 7.

Non-active companies
A non-active company is a company that has:
– not received any gross income
– no deductions
– not disposed of any assets
– not been party to any transactions during the tax year
that:
(i) gave rise to income for any person, or
(ii) gave rise to fringe benefits to any employee or any
former employee, or
(iii) gave rise to a debit in the company's ICA (imputation
credit account).
These companies may be excused from filing tax returns if they
complete a Non-active company declaration - IR433 form.

Return due date

If the company has a 31 March balance date, you have until
7 July 2020 to file the return, unless you have been granted
an extension of time. If you have a balance date other than
31 March, this date may be different. Call us on 0800 377 774 if
you are not sure of the filing date.
If the company has a tax agent, you may have until
31 March 2021 to file the return. If this applies, contact
your agent.
6 COMPANY TAX RETURN GUIDE

Late filing penalties

If you have to file a return and you don't send us one, you
may be charged a late filing penalty. You should apply for an
extension of time if you are unable to file your return on time.
The penalty for filing your IR4 late depends on the company's
net income. If your income is:
– below $100,000, the penalty is $50
– between $100,000 and $1 million (both figures inclusive),
the penalty is $250
– above $1 million, the penalty is $500.
If you need an extension to your tax return filing date, tell us
your reasons before your return is due. If you get a late filing
penalty before applying for an extension, the penalty will
stand. If you use a tax agent who has an extension of time
arrangement with us and the extension is withdrawn, we will
notify you that you must now file your return.

Tax sparing
Any company that has claimed a foreign tax credit for a tax
sparing arrangement under a double tax agreement, must also
complete a Tax sparing disclosure return - IR486 and send it
to:
International Revenue Strategy
Inland Revenue Department
PO Box 2198
Wellington 6140

Group investment funds

If the company's income is solely from Category A income,
you must file an IR4. If the income is solely from Category B
income, you must file an IR6. If the income is a combination of
both Category A and Category B income, you must file an IR4
and IR44E. Read the notes in the IR44E for further information.

Research and development (R&D) tax losses

You may be able to cash out any R&D losses if your company is
a loss-making company that is a resident in New Zealand and
your expenditure on R&D salary and wages is 20% or more of
your total salary and wage expenditure. For more information
go to ird.govt.nz/research-development
ird.govt.nz 7

Superannuation schemes
A superannuation scheme, not registered with the Financial
Markets Authority (FMA), which lets beneficiaries contribute,
will be treated as a company for tax purposes and must file IR4
returns.

Trans-Tasman imputation and imputation groups

Australian companies can elect to maintain a New Zealand
imputation account from the 2003-04 tax year. A form of
grouping (for imputation purposes only) has also been
introduced, which Australian companies may join.
Return filing for trans-Tasman imputation
Australian companies that make a trans-Tasman imputation
election are required to file an Annual imputation return
- IR4J by 31 July, after the end of the tax year. A Companies
income tax return - IR4 isn't required, unless the company
has a permanent establishment (eg, maintains an office) in
New Zealand.
Return filing for imputation groups
Companies income tax return - IR4
Company returns must be filed by:
– all New Zealand companies that elect to be a member of
an imputation group and
– Australian companies with New Zealand-sourced income.
Annual imputation return - IR4J
The imputation return for an imputation group should be filed
by the group representative on a separate IR4J return.
Imputation group members should not include any
imputation details on page 7 of the IR4. An exception applies
for nominated companies of a resident imputation group
where there is an ICA debit balance.
Foreign dividend payments - FDP
The FDP rules have been fully repealed from 1 April 2017. This
means FDP can no longer be included in your annual income
tax return. Please do not include FDP credits in Box 14A and
also leave 43B and 44B blank.
For further details go to ird.govt.nz/imputation
8 COMPANY TAX RETURN GUIDE

Imputation return
Most New Zealand resident companies, unit trusts, producer
boards and cooperatives must file an imputation return each
year. If you're an Australian company or part of an imputation
group, please read page 7. The following bodies don't have to
file imputation returns:
– non-resident companies
– look-through companies
– trustee companies (but not group investment funds with
Category A income)
– any company with a constitution that prevents it
distributing all its income or property to any proprietor,
member or shareholder
– companies whose income is completely exempt from tax
– local authorities
– Crown research institutes
– non-active companies
– Māori authorities.

Note
If you need to file the company’s imputation return before
the income tax return is due, to allow a refund to be
released, complete an Annual imputation return - IR4J.

Questions 1 to 8 Company details

Fill in Questions 1 to 8 only if the correct information is not
printed on the return.

Question 2 - Company name

If the company has changed its name since the last time a
return was filed, please attach a copy of the new certificate
of incorporation with the name change details or call us on
0800 377 774 so we can update our records.

Question 4 - Postal address

If you have a new postal address, write the details at
Question 4. If your new address is a PO Box number, please
show your box lobby if you have one. If you are unsure of your
box lobby please contact New Zealand Post.
Leave this address panel blank if the company uses its agent's
postal address. The agent will let us know of any change of
address when they update their client list.
ird.govt.nz 9

Question 6 - Business industry classification (BIC)

code
If you're involved in a business or a trading activity, please
write the BIC code only in Box 6. You don't need to give a
description.
We're required to supply the Accident Compensation
Corporation (ACC) with a code for your business or trading
activity, for levy classification and calculation.
To work out your main business or trading activity and
its code, go to businessdescription.co.nz or call ACC on
0508 426 837.
It's important that you choose the code which most accurately
reflects your main business or trading activity.

Question 7 - Phone number

We ask for your daytime phone number so we can contact you
if we have any questions about your return.

Question 8 - Bank account number

The fastest and safest way to get any refund is to have it direct
credited to your New Zealand bank account or other deposit
account, eg, a building society account. If your bank account
number isn't preprinted on the return form, please include it
at Question 8.
If your suffix has only two digits, enter them in the first two
squares of the suffix box.

Question 9 Non-resident
A company is a tax resident of New Zealand if:
– it's incorporated in New Zealand, or
– its head office or centre of management is in New Zealand,
or
– its directors control the company in New Zealand.
Otherwise, it's a non-resident for tax purposes.

Questions 10 and 10A Imputation

Page 7 of the IR4 return is the annual imputation return. If you
have made any monetary entries in the annual imputation
return, tick "Yes" at Question 10A.
10 COMPANY TAX RETURN GUIDE

Note
If you have filed, or will file, a separate Annual imputation
return - IR4J, tick “No” at Question 10.

Question 11 Has the company ceased?

If this is a final return, include a set of accounts up to the
date the company ceased trading and include details of any
distribution of assets and liabilities.
If the company is registered for GST or as an employer, you will
need to complete a Business cessation - IR315 form to finalise
your records.
Depending on the company's circumstances, a number of
other issues may need to be finalised, for example:
– outstanding returns
– arrears
– FBT or ACC
– imputation account balances (for qualifying companies)
– specified superannuation contributions
– RWT on dividends
– 10-year bonus issues.
Find out how to finalise the company's tax accounts or
deregister for GST at ird.govt.nz

Note
A company is still a legal entity until it is taken off the
Companies Register. A company can stop trading (become
non-active) but still have tax obligations such as filing
returns. Non-active companies can be excused from filing -
see page 5.
ird.govt.nz 11

Company tax return

Question 12 Income from schedular
payments
If the company has received any schedular payments, we
will send you a summary of income (previously known as a
summary of earnings).
Add up the total tax withheld and all the gross payments
shown on the summary of income and write the totals in
Boxes 12A and 12B.
The summary of income form may not contain all the
company's earnings information. If any details are missing,
please include them at Question 12.
If the company received a payment with no tax deducted,
include the gross amount in Box 12B.

Mineral mining tax credit

Include in Box 12A the amount of refundable tax credit being
claimed where a tax loss is incurred on disposal of land or by
claiming rehabilitation expenditure.

Transferring tax deductions

Tax deducted from schedular payments made to close
companies can be transferred directly to the company’s
shareholder-employee(s) in some circumstances.
You’ll need to reduce the amount claimed in Box 12A by the
amount of tax deducted from schedular payments which
has been transferred direct to a shareholder-employee of the
company. You will still need to include the total schedular
payments made to the company in Box 12B.
12 COMPANY TAX RETURN GUIDE

Example
LLC received schedular payments of $10,000 with total tax
deducted of $2,000 during the year.
The $10,000 is attributable to the company’s shareholder-
employee through the attribution rule.
LLC can transfer up to $2,000 of the tax deducted from
the schedular payments it received to the company’s
shareholder-employee(s).
LLC transfers the full $2,000 of tax to the company’s sole
shareholder-employee.
As the full amount of tax has been transferred from LLC the
amount in Box 12A should be $0.

If the company is transferring tax deducted to shareholder-

employee(s) it should attach details of the transfer to the
return.
The amount of tax transferred from the company to its
shareholder-employee(s) will also need to be recorded as a
debit entry in the company’s imputation credit account - see
Question 44D on page 49.

Question 13 New Zealand interest

Interest from all New Zealand sources must be shown in the
return. Write the total of all RWT deducted in Box 13A. If
the company has had NRWT deducted from New Zealand
interest, include this in Box 13A. Add up all the gross interest
amounts (before the deduction of any tax) and write the total
in Box 13B.

Interest on broken term deposits

If you have broken a term deposit during the year, you may
have to account for "negative interest". This is interest repaid
on the term deposit and may reduce the amount of interest to
declare on the tax return.
If the term deposit was broken in full, or it was business-
related, deduct the negative interest from the gross interest
amount shown on the RWT withholding certificate (IR15 or
equivalent statement).
Deduct the allowable negative interest part, using the
worksheet below, before entering the gross amount at
Question 13 of the tax return. In all other cases, the negative
interest is deductible in a later tax return when the term
deposit matures.
ird.govt.nz 13

Worksheet
Copy your gross interest
from your RWT withholding 1
certificate to Box 1.
Print any negative interest you
have paid in Box 2.
2
Subtract Box 2 from Box 1
and print the answer in Box 3.
Copy this amount to Box 13B
3
of your tax return.

Interest paid or charged by Inland Revenue

If we pay interest, include the interest in Box 13B for the
income year the company received the interest.
If the company paid us interest, include it as a deduction in the
return for the income year the interest is paid.

Note
If expenses are deductible against the interest income, claim
them at Box 20B.

Don't send in the certificates or IR15 forms with the return,

but keep them in case we ask for them.

Income from financial arrangements

If the company was a party to a financial arrangement, such
as government stock, local authority stock, mortgage bonds,
futures contracts or deferred property settlements, the income
or expenditure from the financial arrangement may have to
be calculated using a spreading method, rather than on a cash
basis. If the financial arrangement matures or is sold, remitted
or transferred, a "wash-up" calculation known as a base price
adjustment must be made.
Any RWT will be deducted on a cash basis. Show the RWT
deducted and any income from the financial arrangement in
Boxes 13A and 13B.

Question 14 New Zealand dividends

Generally, dividends are taxable. However, there is an
exemption for dividends paid between members of a wholly
owned group.
To work out the total gross dividends, add up all net dividends
received, any imputation credits, and any RWT deductions.
Write the total of all dividends in Box 14B.
14 COMPANY TAX RETURN GUIDE

Note
The FDP rules have been fully repealed from 1 April 2017.
Don’t include any FDP credits in Box 14A.

Dividend tax credits

The total tax credits for dividends (i.e. imputation credits) you
can claim is limited to the income tax payable (28%) on each
dividend the company receives. This is to ensure that surplus
tax credits are not used to shelter tax on other income.
Work out whether you need to apply this limitation to the
dividend tax credits you will claim.

Copy your total gross dividends

(calculated for each dividend
that had an imputation credit)
1
from Box 14B to Box 1.
Multiply Box 1 by 0.28 (28%),
and write the result in Box 2.
2
Write your total dividend tax
credits (calculated for that 3
dividend) in Box 3.

For each dividend, claim a dividend tax credit for the lower
amount shown in Box 2 or Box 3.
Write the total dividend imputation credits you are allowed to
claim in Box 14.
In Box 14A write the sum of your total dividend RWT credits
you are allowed to claim.

Note
If expenses are deductible against the dividend income,
claim them at Box 20B.

Unit trusts
Distributions from unit trusts will generally be taxable. The
statement you receive from the unit trust should show the
amounts to include in the return.
For unit trusts that are also portfolio investment entities (PIEs)
see page 19.
ird.govt.nz 15

Transfer of deductible expenses between member

and master funds
From the 2002-03 income year a member fund may, in certain
circumstances, elect to transfer deductible expenses to a
master fund. The master fund must invest, in whole or in part,
in the member fund. The master fund can then deduct the
transferred expenses.
A member fund can include a group investment fund
that derives Category A income, a public unit trust or a
superannuation fund. A master fund can include a group
investment fund that derives Category A income or a public
unit trust.
A public unit trust includes:
– retail unit trusts, whose units are offered to the public and
which have 100 or more unit holders
– wholesale unit trusts, whose units are held by widely
held investment vehicles such as other unit trusts or
superannuation funds.
Member or master funds wanting to take advantage of this
provision should include details of the adjustment in a tax
reconciliation statement accompanying the return. The
information should accompany the returns of both funds
involved in the transfer.
For more information see our Tax Information Bulletin (TIB)
Vol 13, No 11 (November 2001).

Qualifying companies
Generally, if a qualifying company is a shareholder in a company
that isn't a qualifying company, all dividends the qualifying
company derives from the other company are taxable.
Dividends derived by a company (that has been a qualifying
company at any time before deriving the dividends) are taxable.
If a qualifying company is a shareholder in another qualifying
company, only dividends with imputation credits attached
and a return of a 10-year bonus issue before the 10-year period
expires, are taxable. Dividends with no imputation credits
attached, or a return of a 10-year bonus issue 10 years from the
payment date, are exempt income.
A distribution of a 10-year bonus issue before the 10-year
period has expired, made when the company winds up, isn't
taxable.
16 COMPANY TAX RETURN GUIDE

If you need more help, read our guide Qualifying companies

- IR435.
Don't send in the dividend statements with the return, but
keep them in case we ask for them.

Question 15 Māori authority

distributions
Māori authorities can make various types of distributions.
Fill in Question 15 if you received any taxable Māori authority
distributions between 1 April 2019 and 31 March 2020. The
Māori authority that paid you the distribution will send you a
Māori authority distribution statement.

Credits attached to distributions

The Māori authority may attach a credit to the distribution
it makes to members. This credit will be classified as a Māori
authority credit and is part of the tax the Māori authority has
already paid on its profits, so the distributions are not taxed
twice.

What to show in your return

Your Māori authority distribution statement shows the
amount of:
– the distribution made to you, including the taxable
portion and the non-taxable portion
– Māori authority credit.
These amounts, not including any non-taxable distribution,
will need to be transferred to the relevant boxes at
Question 15.

Example
A Māori authority makes a pre-tax profit of $10,000. It pays
tax on this profit of $1,750 (Māori authority tax rate of
17.5%) and distributes the entire profit to its 10 members.
Each member will receive $825 as a cash distribution and
$175 of Māori authority credits.
Each member of the authority liable to file an IR4 return
would show the following information at Question 15:
– Box 15B - $1,000 (made up of $825 + $175)
– Box 15A - $175
ird.govt.nz 17

Question 16 Partnership, estate or trust

income
If the company received any income from a partnership, estate
or trust, write any tax credits in Box 16A and the income totals
in Box 16B.
Don't include any:
– overseas income - show this at Question 18 along with any
credits attached
– dividend imputation credits attached to dividends
(include these in Box 14, RWT withheld in Box 14A and the
gross dividend in Box 14B).
Add up any other tax credits from partnerships, estates or
trusts and write the total in Box 16A.
Add up all the other income from partnerships, estates or
trusts and write the total in Box 16B.

Losses from limited partnerships

If the company is claiming a loss from a limited partnership
and you need help working out the amount you can claim,
please go to ird.govt.nz

Estate or trust income

If you received a taxable distribution from a non-complying
trust, please attach a note with your return giving details of the
amount and any associated tax credits.
We separate taxable distributions from a non-complying trust
because they are taxed at a different rate. We need these
details to work out your tax liability correctly.

Question 18 Overseas income

If your company received income from or while based
overseas, between 1 April 2019 and 31 March 2020, show
it in New Zealand dollars at Box 18B. If the company is a
New Zealand resident for tax purposes, you must include any
foreign contract or service income in Box 18B.

Foreign investment fund (FIF)

If the company held rights, such as shares, units or an
entitlement to benefit in any foreign company, unit trust,
superannuation scheme or life insurance policy, at any time
during the 2020 income year, you may be required to calculate
FIF income or loss.
18 COMPANY TAX RETURN GUIDE

If the company has an interest in a controlled foreign company

(CFC), they must calculate any attributed income or loss from
that interest.
Generally, the company will use the fair dividend rate to
calculate FIF income.
The main exclusions from an interest in an FIF are:
– investments in certain Australian resident companies listed
on approved indices on the Australian stock exchange, that
maintain franking accounts
– interest in certain Australian unit trusts
– limited exemptions for interests in certain venture capital
interests that move offshore (for 10 income years from
the income year in which the company migrates from
New Zealand)
– a 10% or greater interest in a CFC.

CFC income and losses

New rules were introduced in 2009 for calculating income or
losses from a CFC.
If the company has an interest in a CFC, they must calculate
any attributed income or loss from that interest.
Losses from a CFC can't be used to offset domestic income or
be included in domestic losses carried forward to the next tax
year. Generally, these losses can only offset income or future
income from CFCs resident in the same country as the CFC
that incurred the loss.
When CFC income or losses are calculated under the new
rules, transitional rules apply to the use of carried forward
losses incurred under the old rules.
You can find more information on the rules at ird.govt.nz and
in our Tax Information Bulletin (TIB) Vol 21, No 8 (October/
November 2009).

What to show in your return

You can convert all overseas income and tax credits to
New Zealand dollars by:
• using the rates table available from
ird.govt.nz/tools-calculators
• contacting the overseas section of a trading bank and
asking for the exchange rate for the day you received your
overseas income.
ird.govt.nz 19

If the income was received from a financial arrangement, refer

to Determination G9A or G9C under section 90 of the Tax
Administration Act 1994.
Write the total of the allowable overseas tax paid in Box 18A.
Include in Box 18B income before the deduction of any tax.
Credit for tax paid overseas will be limited to the amount of
New Zealand tax payable on that income. Please note that
Australian franking credits or tax credits on dividends from the
United Kingdom can't be claimed.
Staple proof of tax paid overseas to the top of page 3 of the
return.
Foreign tax credits attached to dividends that are not required
to be returned under the FIF rules can be claimed up to the
amount of New Zealand tax payable on the FIF interest.
Some foreign dividends have New Zealand imputation credits
attached or New Zealand RWT deducted. These credits are not
subject to the foreign tax credit limitation rule.

Investments in portfolio investment entities (PIEs)

Certain PIEs attribute their net income/loss and tax credits
to the investors. Companies that are investors include the
attributed income or loss in their tax return.
Each year, the PIE is required to provide an investor statement
setting out the details of the income/loss attributed to the
investor for the year. The statement also shows the various
types of tax credits associated with the income that has been
attributed. These tax credits are subject to the tax credit limits
calculated in relation to the tax on the attributed PIE income.
The attributed PIE income/loss is included in the company's
return for the period that includes the end of the PIE's income
year. Generally, PIEs have a 31 March balance date.
The amount of income the company derives as a distribution by
a PIE is excluded income unless it is fully imputed dividends from
a listed PIE. Dividends from these PIEs are not liable for RWT.
For more information, go to ird.govt.nz or read our guides,
Information for companies that invest in PIEs - IR857 and
Portfolio investment entity: a guide for PIEs - IR860.
20 COMPANY TAX RETURN GUIDE

Question 19 Income and expenditure

from residential property
This question applies to close companies that own residential
property, including overseas property that come within the
residential property deduction rules in subpart EL of the
Income Tax Act 2007.
The residential property deduction rules, and question 19, do
not apply to residential land that is owned by companies other
than close companies.
Close company - generally a company with five or fewer
natural persons whose total voting interests are more than
50%. Associated persons are treated as one person.
Most residential rental properties are subject to the residential
property deduction rules (also known as the ring-fencing
rules). The rules generally limit the amount of residential
deductions you can claim in the year to the total amount
of residential income earned in that year. If the residential
property makes a loss it must be carried forward to the next
year in which residential income, including income from
properties held on revenue account, is earned.
There are two levels of exclusions from the residential rules.
Any rental income or loss and net income or loss from a
taxable disposal is fully excluded from the new rules if the
property is:
• the main home;
• property subject to the mixed-use asset rules (holiday
home rented out part-time);
• property owned by companies other than close companies;
• property owned by government enterprises;
• certain employee accommodation.
For these types of property, the existing rules apply with the
rental income or loss shown at Box 20 and net income or net
loss from a taxable disposal shown in Box 21.
Any rental net loss and net loss from a taxable disposal is
partially excluded from the new rules if it is for:
• property that will always be taxed on sale, being revenue
account property of a person in the business of building,
developing or dealing in land;
• other revenue account property the person has notified us
they want the exclusion to apply to.
ird.govt.nz 21

For these types of property any rental net loss is shown at

Box 20 and taxable disposal net loss is shown at Box 21. Net
rental income and net income from a taxable disposal plus
any depreciation recovered is shown as residential income at
Box 19A.
Refer to the Rental income – IR264 guide for information
on when the rules apply, how to calculate your income,
the amount of deductions you can claim for this year, and
the amount of any excess deductions that must be carried
forward.
The residential property deduction rules also apply to any
company who has borrowed money to acquire an interest in
certain entities with significant rental property holdings - a
residential land-rich entity - and has interest expenditure on
the borrowed money.
Residential land-rich entity - a close company, partnership or
look-through company that holds more than 50% of its assets
by value in residential land directly or indirectly. They come
under the interposed entities rules as part of the residential
property deduction rules.
For more information about the interposed entity rules,
see page 60 of the Tax Information Bulletin Vol 31 No.8
September 2019.

Completing Question 19 in your return

Tick the method you used to calculate your residential
property income and deductions.
You can use one of the following:
• Portfolio basis – combine the income and deductions for
all rental properties in a portfolio.
• Individual, property-by-property basis – income and
deductions of individual property calculated separately to
other property. You need to maintain separate records for
each property to choose this option.
• Combination of the property-by-property basis and
portfolio basis – choose to apply different methods to
different property.
The Residential property deductions worksheets – IR1226
can be used to calculate the information required to be shown
in your return.
Calculate and identify the amounts for Boxes 19A to 19F using
your chosen method/s.
22 COMPANY TAX RETURN GUIDE

Write the total residential income in Box 19A. This is the total
of:
a. all residential rental income from a portfolio and/or
individual property
b. all depreciation recovery income for assets disposed of
from a portfolio and/or individual property
c. net income from the taxable sale/disposal of a property in
a portfolio and/or individual property, and
d. all net residential rental income, depreciation recovery
income and net income from the taxable disposal of
property from residential property excluded because it is
held on revenue account.
Only include the net income from a disposal once.
If you are a partner in a partnership or owner of a look-through
company and have been attributed residential income
Box 26G on the IR7P or IR7L include that here.
Write the total residential rental deductions for residential
rental properties in Box 19B. This is the total deductions for
the current year – Box 14 on the Rental income – IR3R if
completed.
If you are a partner in a partnership or owner of a look-
through company and have been attributed residential rental
deductions shown in Box 26M on the IR7P or IR7L include that
in Box 19B.
If the company has breached the continuity rules, or you’re
transferring excess deductions to a wholly owned group
member, you’ll need to reduce the current year deductions
in Box 19B to reflect the adjustment. The brought forward
and carry forward boxes are calculated by our system when
your return is processed. If the deductions are too low, you’ll
need to contact us so we can change it when we process your
return. Include a note with your return. See Question 27 for
details on the continuity rules.
Include the amount of any interest paid on an investment in
a residential land rich entity that relates to the rental activity
in Box 19B. Include the amount of interest paid that doesn’t
relate to the rental property in Box 20.
ird.govt.nz 23

Write the total excess residential rental deductions brought

forward from last year in Box 19C. This Box cannot be
completed for the tax year ending 31 March 2020.
Add Boxes 19B and 19C for total rental deductions.
Calculate the amount of allowable deductions you can claim
this year adjusting for excess deductions. Write the total
Residential rental deductions claimed this year in Box 19D. This
should equal Box 19B plus Box 19C less the amount of excess
deductions for each property and/or property portfolio shown
in Box 19F.
The amount cannot exceed total residential income at
Box 19A, unless there was a taxable sale/disposal of a rental
property.
Combine the net income results (after adjusting for any excess
deductions) for all properties and write the total in Box 19E.
Your total Net residential income in Box 19E cannot be a loss,
unless the rental property or all the properties in the portfolio
have been disposed of as taxable sales.
Any losses are counted as zero unless the loss is the result of
either:
• excess deductions released as the result of the taxable
disposal of the rental property or all portfolio properties.
• claimable interest paid on your investment in a residential
land-rich entity. Refer to the Rental income – IR264 guide.
Write the total excess deductions for the year to be carried
forward to next year in Box 19F. This is calculated as Residential
rental deductions Box 19B minus Residential rental deductions
claimed this year Box 19D. This includes the amount of any
excess deductions to be carried forward for interest paid on an
investment in a land rich entity in Box 19F.
24 COMPANY TAX RETURN GUIDE

NOTES
Note 1
If you sell/dispose of an individual property and the sale
is not taxable; or you sell/dispose of the last property in a
portfolio and at least one of the sales in the portfolio was
not taxable, any excess deductions will transfer to another
property or portfolio and carried forward to a future year
in which you earn income from a residential rental property
(including properties on revenue account).

Note 2
If you sell/dispose of an individual property and the sale
is taxable, or you sell/dispose of the last rental property
in a portfolio, and the sale of all your rental properties
in a portfolio were taxable, any remaining loss/excess
deductions are released and can be offset against other
income. However, this does not include any excess
deductions transferred to the portfolio/property.

Note 3
If you want to claim that a property is held on revenue
account where the sale may be taxable, you need to tell us
the property details of the property. You will be stating the
sale will be a taxable sale when the property is disposed
of. You must be able to separately identify the deductions
relating to the property.

For more information read the Rental income – IR264 guide.

ird.govt.nz 25

Question 20 Business or other rental

income
Write the net profit or loss in Box 20B. This is the amount of
income or loss after the deduction of all allowable business
expenditure, including shareholders’ salaries paid or credited.

Only include net residential rental income or losses not

included at Question 19 and commercial rental income in
Box 20B.

Don’t include any income already shown at Questions 12 to

16 and 19, losses from CFCs (see the notes to Question 36 on
page 41) or claim donations here (see the notes to Question 25
on page 30).

Note
If expenses are deductible against income declared in
Questions 12 to 14, claim them here.

Attach either:
– a fully completed Financial statements summary - IR10
form, or
– the company's financial accounts.
The IR10 is a statistics form that sets out a general summary of
information from the financial accounts.
If you complete an IR10 you don't need to send the financial
accounts as well. You still need to complete them (unless the
company is very small) and keep them in case we ask for them.
26 COMPANY TAX RETURN GUIDE

Very small companies are not required to prepare financial

accounts if these conditions apply during the income year. The
company:
• is not part of a group
• has not derived income over $30,000
• has not incurred expenditure over $30,000.
Companies that don't prepare financial accounts must fill in
an IR10 using information from their trial balance or financial
records.
For more information about who has to prepare financial
accounts and minimum financial reporting requirements, go
to our website at ird.govt.nz/records

The attribution rule

Under the attribution rule, anyone whose actions cause an
"associated person" (company, trust or partnership) to earn
income, can be personally liable for tax on that income.
If this rule applies to persons associated to your organisation, it
will affect the amount of taxable income in this return.
To find out how to apply this rule, please refer to our Tax
Information Bulletin (TIB), Vol 12, No 12 (December 2000)
and Vol 13, No 11 (November 2001).
ird.govt.nz 27

Question 21 Income from taxable

property sales/disposals
Include all income and tax losses from land sales that are not
included at Question 19.
• Tax losses from disposals of residential property are also
included under this question.
• Net income from a bright-line sale is included under
Residential income at Question 19. Except when the main
home or holiday home taxed under the mixed-use asset
rules apply.
The profits are taxable if the company bought a property for
the purpose of reselling it or if the company is in the business
of buying and selling land and/or buildings.
The profits may be taxable if the company:
• is a building company and improved a property before
selling it
• developed or subdivided land and sold sections
• had a change of zoning on company property and sold it
within 10 years of buying it.
If the company is a New Zealand tax resident it will need to
pay tax on its worldwide income under New Zealand tax law.
This includes any property sales worldwide whether caught
under the bright-line test for residential property sales or the
other property rules.
If the company purchased a residential property on or after
1 October 2015 and sold/disposed of it within the bright-line
period, any profit will be taxable, whether the intention at the
time of purchase was for resale or not.
The bright-line period for:
• properties purchased/acquired on or after 1 October 2015
through to 28 March 2018 inclusive, is two years,
• properties purchased/acquired on or after 29 March 2018
is five years.
Correctly calculate your profit or loss by completing a
Property sale information – IR833 form for each property
you have sold or disposed of. Include the results of any profit
in your return. You can download the IR833 from ird.govt.nz
Complete the form even if the details have been included in a
Financial statements summary – IR10 or set of accounts.
For more information on property sales see our guide Buying
and selling residential property – IR313.
28 COMPANY TAX RETURN GUIDE

Write the income or loss (other than a bright-line income or

loss) at Box 21B.

Question 21A Residential land

withholding tax (RLWT) credit
If the company is an “offshore RLWT person” and has sold or
transferred residential property located in New Zealand, RLWT
may have been deducted from the sale price. The company
should have received a statement on the completion of the
sale process showing the amount of RLWT deducted. The
company can claim a credit for any RLWT deducted. Show the
amount of RLWT deducted, less any RLWT paid back to the
company and/or transferred to outstanding amounts during
the income year.
If there was more than one amount of RLWT deducted,
show the combined amount, less any RLWT paid back to the
company and/or transferred to outstanding amounts during
the income year.

Question 22 Insurance premiums paid to

an overseas insurer
Special rules apply to any company paying a premium,
including a reinsurance premium, to a non-resident insurer.
If you're paying a premium to a non-resident insurer you need
to get a separate IRD number to account for the tax on the
premium income. This is because you're considered to be the
insurer's agent.
You will need to file an IR4 return under this separate
IRD number and declare premiums paid as the only income
received.
Only 10% of the total gross premiums paid to overseas insurers
is subject to the company tax rate of 28%. This equals 2.8% of
the total premiums paid. Any premiums paid to insurers in
Switzerland aren't subject to tax in New Zealand and should
be deducted from the total gross premiums paid.
Agency obligations also extend to other New Zealand
residents, eg, brokers, who may initially collect premiums for
payment to the non-resident insurer. If there is any default, the
insured person is responsible for the tax.
Print the gross amount of premiums paid to a non-resident
insurer in Box 22. Print the gross amount of premiums paid
to Switzerland in Box 22A. Deduct the figure in Box 22A from
Box 22 and multiply the net amount by 0.1 (10%). Print your
answer in Box 22B and copy this amount to Box 30.
ird.govt.nz 29

No other income should be returned as an agent for an

overseas insurer.
The company still needs to declare other income under its
original IRD number.
If you have any enquiries, contact:
Large Enterprises Services
Investigations and Advice
Private Bag 39984
Wellington Mail Centre
Lower Hutt 5045
Phone 0800 443 773

Question 23 Other income

Show any other income received by the company at
Question 23. For example, the sale of:
– shares or other property
– securities
– income from an undertaking or scheme.

Note
If the company has a 2020 loss it is carrying back to
2019, enter the loss amount in Box 23B (Other income)
in your 2020 income tax return. See ‘Loss carry-back’ at
Question 27 on page 32.

Income from sale of non-FIF shares or other property

Profits from the sale of shares and other property are taxable if
the company:
– buys and sells shares or other property as a business, or
– buys shares or other property for the purpose of resale.
This does not apply if shares are FIFs. List the details of income
and expenses from these sales on a sheet of paper and staple
it to the top of page 3 of the return. Include the total profit in
Box 23B.

Losses from shares or other property that are not a

foreign investment fund (FIF)
If the company has made a loss from the sale of an asset that
was not a FIF and you can show that any profit made would
have been taxable, you may be able to claim the loss as a
deduction.
30 COMPANY TAX RETURN GUIDE

Financial arrangements
A company must account for income from financial
arrangements on an accrual basis. Financial arrangements
include government stock, futures contracts and deferred
property settlements, excluding short-term agreements for sale
and purchase of property. Changes to the rules for the treatment
of financial arrangements have split the rules into two sets.
Generally, the first set applies to financial arrangements
entered into before 20 May 1999 and the second applies to
financial arrangements entered into on or after that date.
Both sets of rules require the income or expenditure to be
spread over the term of the financial arrangement.
This applies in every case - the company doesn't have to be in
the business of buying or selling financial arrangements, or be
intending to sell, as it would with shares. The company may, in
certain cases, deduct any losses.
Sale or maturity of financial arrangements
When a financial arrangement matures or is sold, remitted
or transferred, a "wash-up" calculation, known as a base price
adjustment, must be made. The calculation ensures that
the total gains or losses from the financial arrangement are
accounted for.
If you need any information on when losses can be deducted
or how to calculate a base price adjustment, please call us on
0800 443 773.
Income from an undertaking or scheme
Profits from any undertaking or scheme entered into for
the purpose of making a profit are taxable. Describe the
undertaking or scheme and list the details of income and
expenses from them. Staple this information to the top of
page 3 of the return and include the total profit in Box 23B.

Question 25 Donations
A company (including an unlisted company with five or fewer
shareholders) can claim a deduction for donations it makes to
any society, institution, association, organisation, trust or fund
that has donee organisation status. You can view the list of
these organisation at ird.govt.nz/donee

Note
State-funded tertiary education institutions, state schools
and state-integrated schools don’t have to be approved to
have donee organisation status.
ird.govt.nz 31

The deduction for donations can't be more than the

company's net income after expenses (before the donation
deduction is taken into account). Use the following steps to
calculate the company's donation deduction.
• If the amount in Box 24 is a loss, print nil in Box 25B.
• If the donations made by the company exceed the amount
in Box 24, copy the amount in Box 24 to Box 25B.
• If the donations made by the company don't exceed the
amount in Box 24, print the amount of the donations in
Box 25B.

Question 27 Net losses brought forward

Losses from CFCs are not included in Box 27 - see Question 38
on page 42.
Before a company is allowed to carry forward net losses, 49%
continuity of minimum voting interest or market value interest
must be maintained by a group of persons at all times, from
the beginning of the year of net loss to the end of the year of
carrying it forward (the continuity period).
To check whether the shareholder continuity requirements
have been met, use the lowest percentage of economic interest
held by each shareholder during the continuity period. To
calculate the total lowest economic interest see Question 40
on page 43.
There are two types of net losses - specified activity net losses
and other net losses.
Specified activity net losses
These are net losses from specified activities incurred before
the 1991 income year. Any loss balance in relation to a
specified activity that remained at the end of the 2019 income
year must be offset against net income for the 2020 income
year before taking into account other losses. The amount of
this offset cannot exceed the net income.
If the loss balance from specified activities incurred before
the 1991 income year exceeds the net income for the 2020
income year, that excess amount is added to the tax loss for
the year. The tax loss may be grouped with another company,
subject to satisfying the commonality and continuity rules (see
Question 29 below).
Other net losses
Other net losses are all those incurred from the 1991 income
year onwards, including any net loss arising from excess
imputation credits, and any net losses that were not limited
before 1991.
32 COMPANY TAX RETURN GUIDE

Write the total of all specified activity net losses and other net
losses the company can bring forward to 2020 in Box 27A, and
the amount the company has offset against 2020 income in
Box 27B.
If the company cannot offset any net losses in the 2020 income
year write “0.00” in Box 27B.

Note
You should be able to find the amount of net loss the
company has to bring forward on the loss notice sent to you
with the company’s 2019 income tax assessment. If you don’t
have a loss notice, enter the details from your own records.

Loss carry-back
Where on your return to claim a loss carried back
You must let us know if the company is going to use the loss
carry-back scheme. You can do this in the ‘I want to’ section
of your income tax account in myIR and selecting “Opt-in to
carry-back loss”.
Claiming a loss carried back to 2019 from 2020
If the company has a 2020 loss it is carrying back to 2019,
enter the loss amount in Box 23B (Other income) in your 2020
income tax return.
You will then need to amend the company 2019 income tax
return (if already filed) to include the loss. In myIR choose
amendment reason “loss carry-back”. Select income type “you
are claiming net losses brought forward” and enter the amount
of the loss carried-back in Box 25B (Amount claimed this year).
Claiming a loss carry-back in 2020 from 2021
If the company is claiming a loss carry-back in 2020, based on
an estimated loss in 2021, enter the amount of the estimated
loss carry-back in Box 27B (Amount claimed this year).

Question 28 Total income after net

losses brought forward
Subtract Box 27B from Box 26. Print your answer in Box 28.
ird.govt.nz 33

Question 29 Net losses and subvention

payments
To offset net losses there must be a common shareholding of
at least 66%, and 66% continuity of minimum voting interest
must also be maintained (or 66% market value interest if
a market value circumstance exists). To calculate voting or
market value interest see Question 40 on page 43.
To offset a net loss incurred during a current income year, the
loss company and the profit company must be members of
the same group at all times for that income year.
To offset a net loss brought forward, the loss company and
the profit company must be members of the same group of
companies for the entire period, beginning with the income
year the net loss is incurred in and ending with the year
of offset.
The amount of loss offset cannot exceed the taxable income of
the profit company and neither may the amount of loss to be
offset exceed the net loss of the loss company.
Record individual details of the losses claimed or transferred
and subvention payments received or made at Questions 41F
or 41G. The total of these must equal Boxes 29 or 29A
respectively.

Part-year grouping
The general part-year grouping rule is that only the part of the
net loss incurred in the same period as the profit is derived
may be offset, if, during the period:
– the loss company maintains continuity of shareholding,
and
– commonality of shareholding between loss and profit
companies has been maintained.
Net loss and profit amounts allowed to be offset are based
on periods where continuity and commonality requirements
are met for all companies taking part in a part-year grouping
arrangement.
If the company received net losses from another company or
made a subvention payment to another company, put a minus
sign in the relevant last box. Attach a schedule setting out the
names and IRD numbers of the companies and the amount of
the payment or loss.
34 COMPANY TAX RETURN GUIDE

Qualifying companies
Net losses are restricted for grouping and subvention payment
purposes. A qualifying company loss can be offset against any
group company profit (including non-qualifying company
profits).

Question 31E Foreign investor tax credit

The foreign investor tax credit rules reduce the combined
income tax and NRWT imposed on foreign investors with
interests in a New Zealand company. See Tax Information
Bulletin (TIB) Vol 20, No 3 (April 2008) for details about the
change of company tax rate. A company is entitled to a foreign
investor tax credit when it pays a supplementary dividend of
the same amount to its non-resident shareholders. The foreign
investor tax credit can then be offset against the company's
income tax liability.
The foreign investor tax credit arises in the income year the
supplementary dividend is paid and is to be offset in the
following order:
1. Against the company's income tax payable for the year
the supplementary dividend is paid. Enter this amount in
Box 31E.
2. At the company's election, either:
- against the company's income tax liability for any of the
previous four income years, or
- against the income tax liability for another company
in the same wholly owned group of companies for the
year the supplementary dividend is paid in or any of the
previous four income years.
3. Carried forward to subsequent years for offset against the
tax liability of the company or another company in the
same wholly owned group of companies.
If the company has a foreign investor tax credit that can't be
fully offset against its own income tax liability in the income
year the supplementary dividend is paid, attach a note to the
front of the return giving details of how to treat any excess
credit.
ird.govt.nz 35

Question 31G Imputation credits

If the company has imputation credits, it may have a net
loss to carry forward. This will happen if the company's total
imputation credits are greater than the tax payable at Box 31F.
To calculate the net loss to carry forward, subtract the amount
at Box 31F from the total imputation credits (Box 31G) and
divide the answer by 0.28 (28%).
If the deemed net loss is to be offset to other companies
within the same group (rather than carried forward), reduce
the amount of net loss shown at Box 29 by the amount offset.

Question 32 Refunds and/or transfers

If you want your refund transferred to another account or to
arrears being paid off by an instalment arrangement, please tell
us the date you would like this done.
The date you can choose depends on what tax has been
overpaid and whose account you want the credit transferred to.

Note
If the transfer is to arrears being paid off by an instalment
arrangement, you’ll need to include a note with your
return authorising the transfer and giving the following
information:
– that the transfer is to arrears currently under an
instalment arrangement
– the name and IRD number of the taxpayer the transfer
should be made to
– whether the taxpayer is an “associated taxpayer”
– the tax type and period
– the date you want the transfer to take place.

Question 32B Associated taxpayers

For companies, the following persons are associated taxpayers
for the purposes of transferring overpaid tax:
– another company in the same group of companies
– a shareholder-employee of the company
– a partner in the same partnership.
If you want your refund transferred to another person, you will
need to show if they are an associated taxpayer.
36 COMPANY TAX RETURN GUIDE

Transfer date
You can ask for your credit to be transferred at any date as
long as it is not before the relevant dates set out as follows.
For credit transferred:

to your account/an associated taxpayer's account

If the credit is from excess tax deducted (eg, RWT
deducted on interest) it's the day after your balance date
(or 1 April if your balance date is before 31 March).
If the credit is from overpaid provisional tax it's the day
you overpaid it. Please note that special rules apply if tax
pooling funds have been transferred in.

to a non-associated taxpayer's account

It's the later of the day you requested the transfer, or the
day after you file your return.

Future transfer dates

If you want your credit transferred at a future date, attach a
note to the front of your return with the details of the amount
you want transferred, the account you want it transferred to
(if it's to another person and they are associated) and the date
you want it transferred.
If you don't tell us the date you want your credit transferred,
we will transfer it at a date we think gives you the greatest
advantage. If you want the credit transferred at a different
date, you can ask us to change it (even if we have transferred
your credit to cover a debt).

Requesting transfers on your return

You can ask us to transfer a refund to another account by
filling out page 4 of the return. If you ask us to, we will transfer
the refund to:

• the company's own account or an account of someone

associated to the company on the later of:
– the day after the balance date (or 1 April if your
balance date is before 31 March)
– the due date in the destination account.

• an account of someone not associated to the company

on the day after the return was filed.
ird.govt.nz 37

If you want the company's refund transferred at a different

date from those listed earlier, you can attach a note to the
return, including the details of the account you want the
refund transferred to and the transfer date you want. If the
transfer is going to another person, tell us if they are associated
to the company.

Question 33 Initial provisional tax

liability
A company has an initial provisional tax liability if it:
– starts to derive income from a taxable activity in the tax
year, and
– had not derived gross income from a taxable activity
within the preceding four years, and
– has residual income tax (RIT) of $60,000 or more in the
current year.
New businesses don't pay provisional tax in their first year of
operation because there is no RIT from the previous year to
base the calculation on.
However, companies that have an initial provisional tax
liability may be charged interest from the first, second or third
instalment date. The instalment date interest applies from is
determined by the business start date. Some new businesses
make voluntary payments to reduce liability for interest.
More information about the dates interest applies from is
available in our guide Provisional tax - IR289.
There are special rules about how interest is calculated when a
company has an initial provisional tax liability and has changed
its balance date. For further information, see our Provisional
tax - IR289 guide.
Print the date the company started to derive income from the
taxable activity in Box 33.
38 COMPANY TAX RETURN GUIDE

Question 34 2021 provisional tax

2021 provisional tax is charged for income the company will
earn in the 2021 income year. It is payable in two, three or
six instalments. There are three options for calculating your
provisional tax - standard, estimation and ratio.
If the company's 2020 RIT is:
– $5,000 or less it does not have to pay provisional tax, but
it can make voluntary payments
– more than $5,000 but expected to be $5,000 or less for
2021 it may estimate 2021 provisional tax at nil
– more than $5,000 and expected to be more than $5,000
for 2021 it must pay 2021 provisional tax using one of the
payment options.
Standard option (S)
Under this option, your 2021 provisional tax is your 2020 RIT
(where it is more than $5,000) plus 5%.

Note
If you think your income for 2021 will be more than your
2020 income, you can make voluntary payments over and
above the amount you have to pay under the standard
option.

Estimation option (E)

Companies can estimate their 2021 provisional tax. They can
re-estimate any number of times up to and including their final
instalment due date. If the company's 2021 RIT is expected to
be less than its 2020 RIT, estimating may prevent the company
from paying more than it has to.

Note
An estimate must be fair and reasonable at each instalment
it applies to. If you use the estimation option, see “Not
taking reasonable care penalty” and “Interest” on page 39.

If the company estimates its provisional tax, write E in Box 34A

and the amount of 2021 provisional tax in Box 34B.
If you estimate your provisional tax your instalments should be
one-third of your estimation.
If you're using the ratio option and select E at Box 34A this will
mean you are electing to stop using the ratio option.
ird.govt.nz 39

Ratio option (R)

If you're GST registered, you may qualify to use the ratio option
to calculate your provisional tax.
Only enter R at Box 34A if you have already elected to use the
ratio option. Your application to use the ratio option must
be made by phone or in writing before the beginning of the
income year you want to use it.
If you've already elected to use the ratio option and want to
continue using it, enter R at Box 34A.
There is more information about the ratio option in our guide
Provisional tax - IR289.

Not taking reasonable care penalty

When you estimate the company's 2021 provisional tax,
your estimate must be fair and reasonable. If the 2021 RIT is
greater than the provisional tax paid, you may be liable for a
not taking reasonable care penalty of 20% of the underpaid
provisional tax.

Interest
If the company has paid too much provisional tax, we may
pay interest. If it has not paid enough provisional tax, we may
charge interest.
Interest the company pays is tax deductible, while interest we
pay is taxable income.

Election to be a provisional tax payer

A company is a provisional tax payer for the 2020 year if its
RIT for that year is more than $2,500. If the 2020 RIT is $2,500
or less but the company paid provisional tax for the year, the
company may elect to be a provisional tax payer for that year.
This may affect the interest the company may be entitled to
for that year.
To elect to be a provisional tax payer for the 2020 year, attach a
note to the front of the 2020 return.

Change in balance date

There are special rules about when provisional tax is due and
how interest is calculated if there has been a change in the
balance date.
For more information, read our guides Penalties and interest -
IR240 and Provisional tax - IR289.
40 COMPANY TAX RETURN GUIDE

Tax pooling
Tax pooling allows taxpayers to pool provisional tax
payments, offsetting underpayments by overpayments
within the same pool. This reduces their possible exposure
to late payment penalties and interest. For more information
about tax pooling, including a list of intermediaries, go to
ird.govt.nz/tax-pooling

Payment dates
2021 provisional tax
Generally, a company with a 31 March balance date pays
provisional tax by the following due dates:
First instalment 28 August 2020
Second instalment 15 January 2021
Third instalment 7 May 2021
A company with a balance date other than 31 March generally
pays provisional tax on the 28th day of the 5th, 9th and 13th
months after the balance date.
There are two exceptions:
• If it would be due on 28 December it is due on 15 January.
• If it would be due on 28 April it is due on 7 May.
These dates will alter if the company is registered for GST, and
• the GST filing frequency is six-monthly, or
• provisional tax is paid through the ratio option.
If either of these situations apply to you, read our guide
Provisional tax - IR289.

2020 end-of-year income tax

Companies that have an agent and an extension of time may
have until 7 April 2021 to pay their tax. If you think this applies
to your company, contact your agent.
A company with a balance date between 1 March and
30 September must pay its end-of-year income tax (Box 31L)
and any interest by 7 February 2021.
A company with a balance date between 1 October and
28 February must pay its end-of-year income tax by the
7th day of the month before the following year's balance date.
ird.govt.nz 41

How to make payments

You can make payments by:
• direct debit in myIR
• credit or debit card at ird.govt.nz/pay
• internet banking - most New Zealand banks have a pay tax
option.
When making a payment, include:
• your IRD number
• the account type you are paying
• the period the payment relates to.
Find all the details of our payment options at ird.govt.nz/pay

Late payment
If you do not pay a bill on time, you may have to pay penalties
and interest.
Contact us if you are not able to pay on time. We’ll look at
your payment options, which may include an instalment
arrangement.
Find out more at ird.govt.nz/penalties

Question 36 Foreign rights

If you calculated CFC or FIF income at Question 18 you may
be required to complete an additional disclosure form for that
investment.
For all interests of 10% or more in a foreign company, the
additional disclosure is required.
For other investments, the requirement for an additional
disclosure depends on the company you are preparing the
Companies income tax return - IR4 for.
• If the company isn't widely held or a PIE, additional
disclosure isn't required if the investments are in countries
New Zealand holds a double tax agreement with (as at
31 March 2020) and the fair dividend rate or comparative
value has been used.
• If the company is widely held or a PIE you are required to
file an additional disclosure.
The disclosure forms are available at ird.govt.nz
Please call 0800 377 774 if you need help to find the
appropriate disclosure form.
42 COMPANY TAX RETURN GUIDE

For information on foreign exchange rates, go to

ird.govt.nz/tools-calculators
Find out more about the base erosion profit shifting (BEPS)
hybrid mismatch rules at ird.govt.nz/beps

Question 37 Share repurchases

When amounts distributed to shareholders on cancellation
or repurchase of shares fall below specified thresholds, the
amounts are taxable in full to shareholders as dividends. When
distributions on repurchases exceed those thresholds, or occur
through the stock exchange, the distributions will be deducted
from available subscribed capital of the company and will
be tax-free to the shareholders. However, this is only to the
extent that the distributions are not in lieu of dividends. If
the subscribed capital of the company has been depleted, the
distributions will be taxable.
Specific rules also govern the repurchase and subsequent sale
of Treasury stock.
The total value entered on the return should be the aggregate
value of all distributions made by the company during the
year for company shares repurchased, redeemed, cancelled or
purchased as Treasury stock.

Question 38 Foreign-sourced dividends

Generally, funds would use the default FIF income calculation
method (the fair dividend rate) which does not tax dividends
separately. However, the foreign tax deducted from the
dividend can be claimed as a credit against the tax payable on
the calculated FIF income.
A credit for any tax paid by the foreign company (on its
earnings) may be allowed in calculating the amount payable
by the New Zealand company. Any NRWT deducted from the
foreign dividend paid to the New Zealand company may also
be allowed as a credit.
Information about exempt foreign dividends
Although most foreign dividends received by companies are
exempt from tax, you should still answer ''Yes'' to this question
if the company receives an exempt foreign dividend.
ird.govt.nz 43

Foreign dividends from some investments are taxable. These

should be included in the tax return as income from overseas.
Dividends on foreign investments are taxable in three
situations:
• When the investment gives the company a direct income
interest of less than 10% in a foreign company, but the
investment is one of certain investments that are excluded
from the normal FIF rules (see Question 18 on page 17 for
the most common exclusions).
• When the dividend relates to an investment in fixed-rate
shares ("fixed-rate foreign equity").
• When the dividend paid is tax-deductible in a foreign
country by a foreign company (a "deductible foreign equity
distribution").

Question 39 Company controlled or

owned by non-residents
We need to know whether the company is owned or
controlled by non-residents because we may need to apply
subpart FE or sections CH 9, GC 6-14 and GB 2 of the Income
Tax Act 2007.

Question 40 Lowest economic interests

of shareholders
The ownership tests measure a shareholder's voting and
market value interests in a company. They apply to the net loss
carry forward and grouping provisions, imputation credit carry
forward provisions and the qualifying company rules.
A shareholding individual's economic interest in a company
will generally be measured by referring to the percentage of
voting power they hold in that company.
44 COMPANY TAX RETURN GUIDE

Example
A company has two shareholders, Barbara and Maria. The
company has two classes of shares:
• Class A shares carry a right to vote on matters other
than the payment of dividends and appointment of
directors.
• Class B shares carry unrestricted voting rights.
Barbara holds all 100 of the A shares in the company while
Maria holds all 100 of the B shares.
Barbara’s percentage of voting interest in the company is
measured as follows:
Variation
Distributions Constitution Directors
in capital
0 + 50 + 50 + 0 = 100
= 25%
100 + 100 + 100 + 100 = 400
Maria’s percentage of voting interest is 75%, calculated as
follows:
Variation
Distributions Constitution Directors
in capital
100 + 50 + 50 + 100 = 300
= 75%
100 + 100 + 100 + 100 = 400

The percentage of voting interest is the total percentage of

rights a person has, by reason of their holding of shares (and
options), to vote on:
– the dividends or other distributions to be made by the
company
– the constitution of the company
– any variation in the capital of the company
– the appointment or election of directors.
The continuity thresholds will be satisfied by taking into
account the lowest economic percentage of rights attached to
shares held by each shareholder of a company.
If Barbara and Maria hold these proportions of shares for the
entire income year, the "total lowest economic interest of
shareholders" or the minimum continuity is 100%, because
Barbara's 25% plus Maria's 75% equals 100%.
ird.govt.nz 45

If the proportion of shares held does not change during the

entire income year, the total lowest economic interest of
shareholders will always be 100%, as shown in the example
below:

Example
On 1 September 2019 Barbara and Maria swapped
shares and held these proportions to 31 March 2020, the
company’s balance date.
1 April 2019 1 Sep 2019 31 Mar 2020 Lowest

Barbara 25% 75% 75% 25%

Maria 75% 25% 25% 25%
The lowest percentage of rights held by each shareholder
during the income year is 25%. So, the total lowest
economic interest of shareholders, or the minimum
continuity, is 50%.

In certain circumstances the shareholders' economic interests

in a company will also be determined by the market value
interests in the company. This is where the voting interests
don't reflect the true economic interests held in a company.
A shareholder's market value interest in a company equals
their percentage share of the total market value of shares (and
options) held in that company.
The specific factors that require a market value interest to be
calculated are called market value circumstances. A market
value circumstance exists where:
– the company has on issue debentures to which
sections FA 2 and FZ 1 of the Income Tax Act 2007 apply
– the company has on issue shares where payment of
dividends is guaranteed by a third party
– there's an option to acquire shares in the company
– an arrangement exists with the purpose of defeating a
provision that depends on measurement of voting and
market value interests.
Add together the lowest economic interest of each
shareholder and print the total in Box 40. Write percentages
in the following format, for example, show 50% as 50.00, and
100% as 100.00.
46 COMPANY TAX RETURN GUIDE

Effect on the imputation credit account (ICA)

If you keep an ICA and have had a change of shareholding of
more than 34% you may need to make an adjustment on your
annual imputation return at Box 44D ("Other debits")
- see page 49.

Question 41 Shareholder details - see

also the IR4S
Complete Question 41 if shareholders, directors and
relatives of shareholders received remuneration or a loan.
Remuneration is liable for ACC levies.

Shareholders' salaries
Write all remuneration with no PAYE deducted that the
company paid to that person in Box 41B.
For the company to claim a deduction for shareholder
remuneration it must be paid either:
– during the income year, or
– within the time allowed for the company to file its return.
If the remuneration isn't paid in time, the deduction can't be
claimed until the following year.
Over-payments of AIM provisional tax that relate to
shareholder employee salary accruals are allowed to be used
to meet the shareholder’s tax liability on that salary at the
end of the income year. Record details of any AIM tax credits
transferred to each shareholder at Box 41C.

Loss offsets and subvention payments

Record details of any losses claimed or transferred from or to
each group member at Box 41F.
Record details of any subvention payments claimed or
transferred from or to each group member at Box 41G.
The total of Boxes 41F must be recorded at Box 29. The total of
Boxes 41G must be recorded at Box 29A.

Current account balance

If the shareholder's current account balance has been
overdrawn, (that is, the shareholder owes the company
money) then it is a debit balance.
ird.govt.nz 47

Annual imputation
return
The annual imputation return must be completed for the
period 1 April 2019 to 31 March 2020, regardless of your
accounting year.
If you're a member of an imputation group, see page 7.
For more information please read our guide Imputation - IR274.

Question 42 Opening balance

This is the same as the closing balance at 31 March 2019. Tick
either "Credit" or "Debit" below Box 42. New companies won't
have a closing balance to bring forward. Write "0.00" in Box 42.

Question 43 Credits
Question 43A Income tax paid
Include in Box 43A all payments of income tax and provisional
tax made from 1 April 2019 to 31 March 2020 for 1989 and
subsequent income years.
Don't include any FBT, ESCT, interest on tax, late payment
penalties, imputation penalty tax or RWT.

Question 43B FDP paid

The FDP rules have been fully repealed from 1 April 2017.
Don’t include an amount at 43B.

Question 43C RWT on interest received

If the company received interest with RWT deducted between
1 April 2019 and 31 March 2020, print the total RWT in
Box 43C.

Question 43D Imputation credits attached to

dividends received
If the company received dividends with imputation credits
attached between 1 April 2019 and 31 March 2020, print the
total credits in Box 43D.
48 COMPANY TAX RETURN GUIDE

Note
This is the total imputation credits attached to dividends
received. This amount is not limited to the tax payable on
your dividends and is not necessarily the same amount as
the imputation credits being claimed in Box 14.

Question 43E Other credits

List any other credits made to the ICA from 1 April 2019 to
31 March 2020. Use a separate sheet of paper if necessary.
Attach it to the top of page 3 and print the total in Box 43E.
Other types of credits include:
– RWT on dividends received
– provisional tax allocated to the company by a company
in the same wholly owned group that has overpaid its
provisional tax
– residential land withholding tax (RLWT) credit deducted
from the sale or transfer of residential land located in
New Zealand during the income year, less any RLWT paid
back to the company and/or transfered to outstanding
amounts during the income year.
Supplementary available subscribed capital account
(SASCA)
If you're a public unit trust or a group investment fund that
maintains a SASCA and you're eligible to transfer credits from
that account to the ICA, record the credits being transferred to
the ICA in Box 43E (other credits).
All public unit trusts or group investment funds maintaining a
SASCA should, by the due date for filing the 2020 IR4 or IR4J,
send a copy of that memorandum account together with any
written queries to:
Investment Desk
Large Enterprises
Inland Revenue
PO Box 2871
Christchurch 8140
For more information on negative dividends and the SASCA
rules, see our Tax Information Bulletin (TIB) Vol 14, No 11
(November 2002).
ird.govt.nz 49

Qualifying company election tax (QCET) payments

Include any QCET payments made after 17 May 2007 as
a credit in the ICA when working out the balance. Use
the account balance in the formula, when calculating the
imputation credit to be attached to a dividend paid by the
qualifying company.
See our Tax Information Bulletins (TIBs) Vol 11, No 5
(May/June 1999) and Vol 20, No 3, page 127 (April 2008).

Question 44 Debits
Question 44A Income tax refunded
Print in Box 44A the company's total income tax refunds
received from 1 April 2019 to 31 March 2020 for 1989 and
subsequent income years. Don't include any interest on tax
received or income tax refunded for any year before 1989.

Question 44B FDP refunds

The FDP rules have been fully repealed from 1 April 2017.
Don’t include an amount at 44B.

Question 44C Imputation credits attached to

dividends paid
If the company paid dividends from 1 April 2019 to 31 March
2020 with imputation credits attached, print the total credits
in Box 44C.

Question 44D Other debits

List any other debits in the ICA and print the total in Box 44D.
Examples of other types of debits are:
– any provisional tax allocated by the company to a
company in the same wholly owned group that has
underpaid its provisional tax
– an adjustment for a change of shareholding of more than
34% during the period 1 April 2019 to 31 March 2020,
regardless of your accounting year
– an adjustment for a change in an imputation ratio
– tax payable by a company on any part of a distribution
not sourced from the subscribed capital of the company,
where that company repurchases a share on-market.
50 COMPANY TAX RETURN GUIDE

Qualifying companies
The 66% continuity of shareholding requirement does not
apply to qualifying companies. There is no need to make an
adjustment where there has been a change of shareholding,
except in the year the company ceases to be a qualifying
company.

Question 45A Adjustments to debit

balance
If a qualifying company received an income tax refund after
1 April 1995 that created a debit balance in the ICA, no further
income tax is required to the extent of any refunds received.
If the qualifying company has a debit balance as a result of
income tax refunded from 1 April 2019, please subtract the
amount refunded at Box 45A.
If the closing balance is a credit, there is no tax to pay.
If the closing balance at Box 45B is a debit, it must be paid by
20 June 2020.

Note
There are two types of relief from payment of debit ICA
balances. These are:
– the offsetting income tax payments
– same debit ICA balances reflected in successive years.
For more information see our Tax Information Bulletin
(TIB) Vol 16, No 1 (February 2004).

Question 46 Imputation penalty tax

Imputation penalty tax of 10% of the debit closing balance is
also payable by 20 June 2020. Work out the 10% penalty in
Box 46.
If the total in Box 46A exceeds $100 and is not paid by the
due date, late payment penalties and interest will apply - see
page 41.
ird.govt.nz 51

Limitations on tax refunds

We may hold all or part of a refund if:
– the company is expecting an income tax refund, and
– the credit balance in the ICA at 31 March 2020 is less than
the refund.
If there have been additional credits to the ICA since 31 March
2020, the company may file an interim 2021 IR4J return in
anticipation of an IR4 annual return being filed at a later date.
We may then be able to release the refund.
We can apply non-refundable overpaid income tax to a
company's previous years' income tax liabilities, where these
debits exist, rather than transferring the credit forward to the
next year's provisional tax.
This avoids further payments having to be made to meet back-
year debts.

Self-assessment by taxpayers
Taxpayers have to assess their own liability as part of their
return filing obligations. We may amend your assessment if a
correction is required.
If you dispute our assessment please go to
ird.govt.nz/disputes for more information. The four-month
period for you to issue a notice of proposed adjustment
(NOPA) to your self-assessment will start on the date Inland
Revenue receives your return.
52 COMPANY TAX RETURN GUIDE

Accident Compensation Act 2001

Under the Accident Compensation Act 2001, Inland Revenue
is required to provide the earnings information at Box 41B
from this return to the Accident Compensation Corporation
(ACC). The information is used by ACC to invoice all ACC
levies. ACC invoicing for close companies (including earners'
levy for shareholder-employee earnings with no PAYE
deducted) starts from September each year.

Maximum earnings from multiple companies

The maximum amount of earners' levy that can be collected
from a shareholder-employee is $1,785.73. A shareholder-
employee may be due for a refund from ACC if the
shareholder-employee's combined total remuneration from
two or more companies is over $128,470. Please call ACC
on 0800 222 776 to find out about the refund process.

ACC earners' levy

Shareholder-employees' salaries or directors' fees without
PAYE deducted are liable for ACC earners' levy. The company
will be invoiced by ACC for this levy. For more information
about refunds or levies, please go to acc.co.nz or call ACC on
0800 222 776.
ird.govt.nz 53

Services you may need

Need to speak with us?
Have your IRD number ready and call us on one of these
numbers:
General tax, tax credits and refunds 0800 775 247
Employer enquiries 0800 377 772
General business tax 0800 377 774
Overdue returns and payments 0800 377 771
We’re open 8am to 8pm Monday to Friday, and 9am to 1pm
Saturday. We record all calls.
Our self-service lines are open 7 days a week - except between
5am and 6am each day. They offer a range of automated
options, especially if you’re enrolled with voice ID.
Find out more at ird.govt.nz/contact-us

0800 self-service numbers

Our 0800 self-service numbers are open 7 days a week - except
between 5am and 6am each day. Make sure you have your IRD
number ready when you call.
For access to your account-specific information, you’ll need to
be enrolled with voice ID or have a PIN.
Order publications and taxpacks 0800 257 773
All other services 0800 257 777
When you call, confirm what you want from the options given.
If you need to talk with us, we’ll re-direct your call to someone
who can help you.

Postal addresses
Returns General correspondence
Inland Revenue Inland Revenue
PO Box 39090 PO Box 39010
Wellington Mail Centre Wellington Mail Centre
Lower Hutt 5045 Lower Hutt 5045

For a full list of addresses go to ird.govt.nz/contact-us and

select the post option.
54 COMPANY TAX RETURN GUIDE

Privacy
Meeting your tax obligations means giving us accurate
information so we can assess your tax and entitlements under
the Acts we administer. We may charge penalties if you do not.
We may also exchange information about you with:
• some government agencies
• another country, if we have an information supply
agreement with them, and
• Statistics New Zealand (for statistical purposes only).
You can ask for the personal information we hold about you.
We’ll give the information to you and correct any errors, unless
we have a lawful reason not to. Find our full privacy policy at
ird.govt.nz/privacy

If you have a complaint about our service

We’re committed to providing you with a quality service. If
there’s a problem, we’d like to know about it and have the
chance to fix it.
If you disagree with how we’ve assessed your tax, you may
need to follow a formal disputes process.
Find out more about making a complaint, and the disputes
process, at ird.govt.nz/disputes