Look through company (LTC) is a fairly new concept to our tax system which was introduced in Budget 2010. Basically the main purpose of introducing LTC is to strengthen our tax system by putting a cap on loss attribution rules.

Look through company rules were applicable from 01/04/2011 onwards and only apply to New Zealand resident companies.

What is it?

Subpart OB of ITA 2007 defines the rules related to Imputation credit accounts (ICA). Every company in New Zealand need to maintain an ICA account, basically if you are paying income tax then it is advisable to maintain this correctly as when you start distributing dividend you can also distribute imputation credits to the shareholders.

Imputation credit account is a memorandum account (section OA2), and section OA3 defines an ICA account must record all credits and all debits that arise in the account as at their credit date or debit date. 
Credit balances
The credit balance recorded in a memorandum account during a tax year or income year, as applicable, is the excess of credits over debits.
Debit balances
The debit balance recorded in a memorandum account during a tax year or income year, as applicable, is the excess of debits over credits.

Motor vehicle is an integral part of any business, and the motor vehicle expense for a small business can be between $5000 to $8,000 per annum thus record keeping and tax rules adherence becomes important.

Things to know about your motor vehicle-

There are four important proposed changes to tax laws announced by the honourable minister Peter Dunne today while making Budget 2013 announcement:-

What is imputation credits?

Imputation credits regime was introduced in NZ in 1988. It is a system which avoids double taxation on already taxed income. So, when NZ Company issue you a dividend this is reported in your tax return as income, and imputation credits attached with that dividend are used as tax credits to avoid double taxation.
Section LA5 (4) ITA 2007: permits imputation credits to be used as credits to settle one's income tax liability.

What is franking credits?

Franking credits is similar to what we have in NZ as imputation credits. In Australia imputation credits are referred as franking credits.
NZ and Australia both have similar imputation credit tax regime which ensures the taxes paid in local jurisdiction are not paid twice.