COV 21/02 released

If you do not have clients who form imputation groups to allow a company with a debit ICA balance to use the credits of a related company to reduce the debit balance, then read no further.

IR has released COV 21/02, ‘Variation to section FN 7(5) of the Income Tax Act 2007’.

Section FN 7(5) basically sets the effective date of any notice provided to IR under the legislative provision, being the start of the tax year in which the Commissioner receives the notice.

COV 21/02 permits a notice given during the period 28th April 2021 to 30th September 2021 to still apply from the start of the tax year ending 31st March 2020. The variation is to recognise that some customers who did not take steps to address a debit balance in their imputation credit account before 31 March 2020 could have used a tax pool or other option to reduce the balance subsequently but the impact of Covid on their profits has been such that these options will adversely affect their cashflow.

This article from the 'A Week in Review' newsletter was originally published Monday 10th May 2021. If you have any questions or would like a second opinion on any national or international tax issues, please contact me [email protected]. 

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