Companies send a distribution statement (also called a dividend statement) to shareholders (and holders of non-share equity interests) to advise them of the amount of dividends paid to them. It also advises whether the dividends are franked or unfranked, the amount of franking credit, and amounts withheld (if any). Managed funds or unit trusts may also send a distribution statement to investors.
If you own shares in a company, you will generally be paid a share of the company's profits as a dividend.
Franked dividends are paid to shareholders out of profits on which the company has already paid tax.
A franking credit is your share of tax paid by a company on the profits from which your dividends or distributions are paid.
New Zealand imputation credits
New Zealand imputation credits are credits arising under New Zealand's imputation system. Australian imputation credits are now called franking credits.
The Tax Office cannot refund your New Zealand imputation credits.
Non-share equity interest
Under the debt/equity rules, certain interests that are not shares in legal form are treated in a similar way to shares.
These interests are called 'non-share equity interests'.
A supplementary dividend is paid by a New Zealand company as part of New Zealand's foreign investor tax credit system.
It ensures that an investor who is not a resident of New Zealand is not taxed in New Zealand through the New Zealand withholding tax system at rates above the New Zealand company tax rate.
Trans-Tasman imputation was introduced by the Australian and New Zealand Governments in 2003. It allows New Zealand companies to elect to join the Australian imputation system. A company that does so can pay dividends franked with Australian franking credits. Similar rules have been introduced in New Zealand to allow Australian companies to elect to join the New Zealand imputation rules.
Last modified: 21 May 2013QC 17566