The Issues Log

Section / Provision Income Tax Act 2007

Section / Provision Income Tax Act 2004

Date Received

Foreign dividend payments (FDPs) appear to fall within the concession extending the due date for last quarter payments to 31 May.  This is not an identified change. 

Section RA 6(3) provides that where a company receives a foreign dividend it must pay FDPs by the due date.  Section RG 3 provides that FDP must be paid by the date set in section RA 15 after the end of the quarter.  Section RA 15(2)(b) provides that where the period for which the payment is made is a month or longer (i.e. a quarter) the payment is due on the 20^th day after the end of a quarter.  However this is modified by section RA 15(2)(c) which provides that when the period for payment is the “last quarter of the year”, payment is due on 31 May.  Section YA 1 defines a “year” as a 12-month period.  On the face of it FDPs in relation to any quarter are due on 31 May as any quarter is arguably the last quarter of a 12-month period. 

We make two submissions in relation to the wording of s RA 15(2)(c):

 1.  Given that a year is simply defined as a “12-month period” it is unclear what “the last quarter of a year” is.  We submit that the wording should be amended to “the last quarter of a tax year” so that it is clear that the “last quarter” is the quarter ended 31 March.  Our proposed wording is consistent with the language used in the FBT rules (see section RD 59(4)).

 2.  It should be clarified that FDPs for the March quarter are not intended to fall within section RA 15(2)(c) and do not receive the extension to 31 May. 

The ITA 2007 be amended retrospectively, but that the application of the amendment for the purposes of UOMI and penalties SHOULD NOT apply to those taxpayers who adopted a tax position for FDP deducted in quarters ending before 7 August 2008 and not paid to the Commissioner before 7 August 2008.