A key point is that in order to carry forward imputation credits, 66% shareholder continuity must be maintained for the period from the time the imputation credit arises until it is used. The time to consider the impact of shareholding changes is before it occurs.
Imputation credits don’t have the same value to all shareholders. They may, for example, not have value for charities or overseas shareholders. Who your shareholders are is an important factor in considering your company or group structure.
Imputation credits are recorded in a memorandum account. There is no limit on how far back the IRD can go when looking at memorandum accounts. Imputation credits need to be carefully managed so that the company does not try to pass them on to shareholders when they no longer exist (for example, because the shareholder continuity requirement was breached), or because an error in the account many years prior has led to a debit in the account. Imputation credit accounts are an area that the IRD is focusing on. It is essential to get it right in order to avoid the loss of valuable credits or the imposition of tax penalties.