Further income tax payable for debit balance in imputation credit account

Section OB 67 of the Income Tax Act 2007 

Key features

Section 113 of the Taxation (Tax Administration and Remedial Matters) Act 2011 amends section OB 67 of the Income Tax Act 2007 to ensure that an amount of a debit balance of an ICA at the end of one tax year is not counted twice in debit balances of the ICA for the immediately following tax year.

Detailed analysis

This amendment corrects an unintended change to the imputation rules, which could have resulted in an incorrect amount of further income tax being charged than under section OB 67's corresponding provisions in the 2004 Act.

Under the provisions of section ME 9(7)-(9) of the 2004 Act, if the ICA remains in debit throughout the next year, these provisions ensured that one year's debit balance is not counted again as part of the ICA debit balance at the end of the immediately following tax year. This rule prevents double taxation arising for further income tax, because of the same debit amount being included in the debit balance of an ICA for consecutive tax years.