Taxes Consolidation Act, 1997 (Number 39 of 1997)
434 Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.
[CTA76 s100; FA89 s27(1)]
(1) In this section—
[4]>
“distributable income” of a company for an accounting period means—
(a) the income as computed in accordance with subsection (4), increased by the amount of the company’s franked investment income for the accounting period [1]>reduced by the tax credit comprised in that income<[1], but
(b) where the aggregate of the amounts specified in paragraphs (d) to (g) of subsection (4) exceeds the income as computed in accordance with that subsection apart from those paragraphs, the amount of the excess shall, in computing the amount of the distributable income, be deducted from the amount of the company’s franked investment income for the accounting period [1]>as so reduced<[1];
<[4]
[12]>
[4]>
“distributable income” means the aggregate of the amounts of the distributable trading income and distributable estate and investment income;
<[4]
<[12]
“estate income” means income (other than yearly or other interest) chargeable to tax under Case III, IV or V of Schedule D, and arising from the ownership of land (including any interest in or right over land) or from the letting furnished of any building or part of a building;
[5]>
“franked investment income” excludes—
(a) a distribution made out of exempt profits within the meaning of section 140,
(b) a distribution made out of disregarded income within the meaning of section 141 and to which subsection (3)(a) of that section applies, and
(c) a distribution made out of exempted income within the meaning of section 142;
“income” of a company for an accounting period means the income as computed in accordance with subsection (4);
<[5]
[14]>
“investment income” of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 3, but does not include any interest or dividends on investments which, having regard to the nature of the company’s trade, would be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that by virtue of section 129 they are not to be taken into account in computing income for corporation tax;
<[14]
[14]>
“investment income” of a company means income other than estate income which, if the company were an individual, would not be earned income within the meaning of section 3, but, without prejudice to the meaning of “franked investment income” in this section, does not include—
(a) any interest or dividends on investments which, having regard to the nature of the company’s trade, would be taken into account as trading receipts in computing trading income but for the fact that they have been subjected to tax otherwise than as trading receipts, or but for the fact that by virtue of section 129 they are not to be taken into account in computing income for corporation tax, and
(b) any dividends or other distributions received by the company in respect of shares at a time when any gain on a disposal of the shares would not have been a chargeable gain by virtue of section 626B or would not have been a chargeable gain by virtue of section 626B if paragraphs (a) and (b) of subsection (3) of that section were deleted.
<[14]
[6]>
“relevant charges”, in relation to an accounting period of a company, means charges on income paid in the accounting period by the company and which are allowed as deductions under section 243, other than so much of those charges as is paid for the purposes of an excepted trade within the meaning of section 21A;
<[6]
[12]>
“trading income” means income arising from a trade (including farming) or profession in respect of which a company is chargeable to corporation tax under Case I or II of Schedule D;
<[12]
“trading company” means any company which exists wholly or mainly for the purpose of carrying on a trade and any other company whose income does not consist wholly or mainly of investment or estate income.
(2) For the purposes of section 440[16]>, the distributions of a company<[16] [16]>and subject to subsection (3A) the distributions of a company<[16] for an accounting period shall be taken to be the aggregate of—
(a) any dividends which are declared for or in respect of the accounting period and are paid or payable during the accounting period or within 18 months after the end of the accounting period, and
(b) all distributions, other than dividends, made in the accounting period.
(3) Where—
(a) a period of account for or in respect of which a company declares a dividend is not an accounting period,
(b) the dividend is paid or payable during the period of account or within 18 months after the end of the period of account, and
(c) part of the period of account falls within an accounting period,
then, the proportion of the amount of the dividend to be treated for the purposes of subsection (2) as being for or in respect of the accounting period shall be the same as the proportion which that part of the period of account bears to the whole of that period.
[17]>
(3A) (a) Where a close company pays a dividend, or makes a distribution, to another close company, the companies may jointly elect, by giving notice to the Collector-General in such manner as the Revenue Commissioners may require, that the dividend, or as the case may be the distribution, is to be treated for the purposes of section 440 as not being a distribution.
(b) Where notice is given in accordance with paragraph (a), the dividend, or as the case may be the distribution, shall be treated—
(i) for the purposes of section 440 as not being a distribution, and
(ii) for the purposes of subsection (5) as not being franked investment income.
(c) An election by a company under paragraph (a) as respects an accounting period shall be included with the return under [19]>section 951<[19][19]>Chapter 3 of Part 41A<[19] which falls to be made by the company for the accounting period.
<[17]
(4) [7]>For the purposes of subsection (1), the income<[7][7]>The income<[7] of a company for an accounting period shall be the income for the accounting period, computed in accordance with the Corporation Tax Acts, exclusive of franked investment income, before deducting—
(a) any loss incurred in any trade or profession carried on by the company which is carried forward from an earlier, or carried back from a later, accounting period,
(b) any loss which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D and which is carried forward from an earlier accounting period or any expenses of management or any charges on income which are so carried forward, and
(c) any excess of deficiencies over surpluses which if such excess were an excess of surpluses over deficiencies would be chargeable to corporation tax on the company under Case V of Schedule D and which is carried forward from an earlier, or carried back from a later, accounting period,
and after deducting—
(d) any loss incurred in the accounting period in any trade or profession carried on by the company,
(e) any loss incurred in the accounting period which if it were a profit would be chargeable to corporation tax on the company under Case III or IV of Schedule D,
(f) any excess of deficiencies over surpluses which if such excess were an excess of surpluses over deficiencies would be chargeable to corporation tax on the company for the accounting period under Case V of Schedule D,
[8]>
(g) any amount which is an allowable deduction—
(i) in computing the total profits for the accounting period in respect of expenses of management by virtue of section 83(2), or
(ii) against the total profits for the accounting period in respect of charges by virtue of section 243(2), and
<[8]
[8]>
(g) any amount which is an allowable deduction against relevant trading income by virtue of section 243A.
<[8]
[8]>
(h) the amount of the corporation tax which apart from section 448(2) would be payable by the company for the accounting period if the tax were computed on the basis of the income determined in accordance with the preceding provisions of this subsection.
<[8]
[9]>
(5) For the purposes of section 440—
“distributable investment income” of a company for an accounting period means—
(a) in a case where paragraph (b) of the definition of “distributable income” applies, the amount determined in accordance with that paragraph, and
(b) in any other case, the sum of the following amounts—
(i) the amount determined by applying to the amount of the distributable income exclusive of franked investment income [2]>(as reduced by the tax credit comprised in that income)<[2] the fraction—
A |
|
B |
where—
A is the amount of the investment income taken into account in computing the tax mentioned in subsection (4)(h), and
B is the total amount of income so taken into account,
and
(ii) the amount of the franked investment income (as reduced by the tax credit comprised in that income),
but, in the case of a trading company, the distributable investment income shall be the amount determined in accordance with the preceding provisions of this definition reduced by 5 per cent;
“distributable estate income” of a company for an accounting period means the amount determined by applying to the amount of the distributable income exclusive of franked investment income [3]>(as reduced by the tax credit comprised in that income)<[3] the fraction—
C |
|
D |
where—
C is the amount of the estate income taken into account in computing the tax mentioned in subsection (4)(h), and
D is the total amount of income so taken into account,
but, in the case of a trading company, the distributable estate income shall be the amount determined in accordance with the preceding provisions of this definition reduced by 7.5 per cent.
<[9]
[9]>
(5) (a) The estate and investment income of a company for an accounting period shall be the amount by which the sum of—
(i) the amount of franked investment income for the accounting period, and
[10]>
(ii) an amount determined by applying to the amount of the income of the company for the accounting period the fraction
A |
|
B |
where—
A is the aggregate of the amounts of estate income and investment income taken into account in computing the income of the company for the accounting period, and
B is the total amount of income so taken into account,
<[10]
[13]>
[10]>
(ii) an amount equal to the aggregate of the amounts of estate income and investment income taken into account in computing the income of the company for the accounting period,
<[10]
<[13]
[13]>
(ii) an amount determined by applying to the amount of the income of the company for the accounting period the fraction—
A |
|
B |
where—
A is the aggregate of the amounts of estate income and investment income taken into account in computing the income of the company for the accounting period, and
B is the amount of the company’s income before taking account of any amount specified in paragraphs (d) to (g) of subsection (4),
<[13]
exceeds the aggregate of—
(I) the amount of relevant charges, and
(II) the amount which is an allowable deduction in computing the total profits for the accounting period in respect of expenses of management by virtue of section 83(2).
(b) The trading income of a company for an accounting period shall be the income of the company for the accounting period after deducting—
[11]>
(i) the estate and investment income of the company for the accounting period as computed in accordance with paragraph (a),
<[11]
[15]>
[11]>
(i) an amount equal to the sum of the amounts specified in subparagraphs (i) and (ii) of paragraph (a),
<[11]
<[15]
[15]>
(i) an amount equal to the amount specified in subparagraph (ii) of paragraph (a),
<[15]
(ii) where the aggregate of the amounts specified in clauses (I) and (II) of paragraph (a) exceeds the sum of the amounts specified in subparagraphs (i) and (ii) of that paragraph, the amount of the excess, and
(iii) charges on income paid for the purposes of an excepted trade within the meaning of section 21A.
(5A) (a) For the purposes of sections 440 and 441, but subject to paragraph (b)—
“distributable estate and investment income” of a company for an accounting period means the estate and investment income of the company for the accounting period after deducting the amount of corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of that income;
[18]>
“distributable trading income” of a company for an accounting period means the trading income of the company for the accounting period after deducting the amount of corporation tax which, apart from sections 22A(2) and 448(2), would be payable by the company for the accounting period if the tax were computed on the basis of that income.
<[18]
[18]>
“distributable trading income” of a company for an accounting period means the trading income of the company for the accounting period after deducting the amount of corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of that income;
<[18]
(b) In the case of a trading company, the distributable estate and investment income for an accounting period shall be the amount determined in accordance with paragraph (a) reduced by 7.5 per cent.
<[9]
(6) The amount for part of an accounting period of any description of income referred to in this section shall be a proportionate part of the amount for the whole period.
(7) Where a company is subject to any restriction imposed by law as regards the making of distributions, regard shall be had to this restriction in determining the amount of income on which a surcharge shall be imposed under section 440.
[4]
Substituted by FA01 s91(1)(a)(i). Applies as respects an accounting period ending on or after 14 March 2001.
[5]
Inserted by FA01 s91(1)(a)(ii). Applies as respects an accounting period ending on or after 14 March 2001.
[6]
Inserted by FA01 s91(1)(a)(iii). Applies as respects an accounting period ending on or after 14 March 2001.
[7]
Substituted by FA01 s91(1)(b)(i). Applies as respects an accounting period ending on or after 14 March 2001.
[8]
Substituted by FA01 s91(1)(b)(ii). Applies as respects an accounting period ending on or after 14 March 2001.
[9]
Substituted by FA01 s91(1)(c). Applies as respects an accounting period ending on or after 14 March 2001.
[10]
Substituted by FA02 sched6(3)(g)(i). Applies as respects the accounting period ending on or after 14 March 2001.
[11]
Substituted by FA02 sched6(3)(g)(ii). Applies as respects the accounting period ending on or after 14 March 2001.
[12]
Deleted by FA03 sched6(1)(b)(i). This section shall be deemed to apply to accounting periods ending on or after 14 March 2001.
[13]
Substituted by FA03 sched6(1)(b)(ii). This section shall be deemed to apply to accounting periods ending on or after 14 March 2001.
[15]
Substituted by FA06 sched2(1)(l). Applies to accounting periods ending on or after 2 February 2006.
[16]
Substituted by FA08 s44(1)(a)(i). Applies as respects a dividend paid, or distribution made, on or after 31 January 2008.
[17]
Inserted by FA08 s44(1)(a)(ii). Applies as respects a dividend paid, or distribution made, on or after 31 January 2008.