Finance Act, 1974
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Taxation of shares issued in lieu of cash dividends. |
56.—(1) In this section— | |
“company” means any body corporate; | ||
“share” means share in the share capital of a company and includes stock and any other interest in the company. | ||
(2) If any person, as a consequence of the exercise, whether before, on or after the declaration of a distribution of profits by a company, of an option to receive in respect of shares in the company either a sum in cash or additional share capital of the company, receives such additional share capital, he shall be deemed to have received from the company, instead of such share capital, income equal to the sum he would have received if he had received the distribution in cash instead. | ||
(3) Any income deemed under subsection (2) to have been received from a company by a person shall— | ||
(a) if the person's profits are chargeable to corporation profits tax, be treated as profits to which Part V of the Finance Act, 1920 , applies and be charged to corporation profits tax accordingly; | ||
(b) if the company is resident outside the State, be treated as income from securities and possessions outside the State and be assessed and charged to tax under Case III of Schedule D; | ||
(c) if the company is resident in the State, be treated as profits or gains not falling under any other Case of Schedule D and not charged by virtue of any other Schedule and be assessed and charged to tax under Case IV of Schedule D. | ||
(4) For the purposes of this section an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person's abandonment of, or failure to exercise, such a right is to be treated for those purposes as an exercise of the option. |