A story – Bob and Joan own their company 50% each and decide, after several successful years of trading, to transfer their shares into their family trust.
They happily do this and several months later bring their end of year work to us.
The successful years have seen a total of $80,000 in taxes paid by the company at 28% and these are now showing as Imputation Credits – to help them credit towards future dividends etc.
BUT – with the share change exceeding 66% they have now “Lost” all their imputation credits. So, $80,000 has disappeared and when they now pay dividends a full 33% Dividend Withholding Tax will have to be deducted and paid to IRD.
SOLUTION – before making any share holder changes please check in with us – so we can help you avoid this trap.
