Corporation Tax Act, 1976

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Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc.

100.—(1) For the purposes of section 101 the distributions of a company 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 eighteen months after the end of the accounting period, and

(b) all distributions, other than dividends, made in the accounting period.

(2) 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 eighteen 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 (1) as being for or in respect of the accounting period shall be the same as the proportion which the said part of the period of account bears to the whole of that period.

(3) For the purposes of subsection (4) the income of a company for an accounting period shall be the income for the accounting period, computed in accordance with the provisions of this Act, 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 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

(c) 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 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 would be chargeable to corporation tax on the company for the accounting period under Case V of Schedule D,

(g) any amount which is an allowable deduction—

(i) against the total profits for the accounting period in respect of charges by virtue of section 10 (1), or

(ii) in computing the total profits for the accounting period in respect of expenses of management by virtue of section 15 (1), and

(h) the amount of the corporation tax which would be payable by the company for the accounting period if the tax were computed on the basis of the income arrived at in accordance with the preceding provisions of this subsection.

(4) In this section—

“distributable income” of a company for an accounting period means the income as computed in accordance with subsection (3) increased by—

(a) the amount of the company's franked investment income for the accounting period reduced by the tax credit comprised in that income, and

(b) any reduction in the income arising in the accounting period made under section 176 (transitional relief for existing companies on cessation of trade, etc.) in respect of any source of income:

Provided that, where the aggregate of the amounts specified in paragraphs (d) to (g) of subsection (3) exceeds the income as computed in accordance with that subsection apart from the said paragraphs, the amount of the excess shall, in computing the amount of the distributable income, be deducted from the aggregate of the amounts specified in paragraphs (a) and (b);

“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 2 of the Income Tax Act, 1967 , but does not include any interest or dividends on investments which would, having regard to the nature of the company's trade, fall to 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 2 (Irish resident company distributions not chargeable to corporation tax), they are not to be taken into account in computing income for corporation tax;

“estate income” means income (other than yearly or other interest) which is chargeable to tax under Case III, IV or V of Schedule D, and which arises 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;

“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;

“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.

(5) For the purposes of section 101—

“distributable investment income” of a company for an accounting period means, in a case where the proviso to subsection (4) applies, the amount arrived at in accordance with the said proviso, and, in any other case, the sum of the following two amounts—

(a) the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction

where—

A is the amount of the investment income taken into account in computing the tax mentioned in subsection (3) (h), and

B is the total amount of income so taken into account,

and

(b) the amount of the franked investment income (as reduced by the tax credit comprised in that income):

Provided that in the case of a trading company the distributable investment income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 5 per cent.;

“distributable estate income” of a company for an accounting period means the amount arrived at by applying to the amount of the distributable income exclusive of franked investment income (as reduced by the tax credit comprised in that income) the fraction

where—

C is the amount of the estate income taken into account in computing the tax mentioned in subsection (3) (h), and

D is the total amount of income so taken into account:

Provided that in the case of a trading company the distributable estate income shall be the amount arrived at in accordance with the foregoing provisions of this paragraph reduced by 7.5 per cent.

(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, then regard shall be had to this restriction in determining the amount of income on which a surcharge shall be imposed under section 101.