Finance Act, 1963

Annual payment payable out of dividend from which income tax is not deductible or is deductible at reduced rate.

8.—(1) Where the whole or any part of any annual payment is payable out of a dividend from which, by virtue of section 7 of the Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956 , or section 9 or section 15 of the Finance (Miscellaneous Provisions) Act, 1956 , income tax either is not deductible or is deductible at a reduced rate—

(a) a payment of the annual payment, or that part thereof, as the case may be, shall be treated as not having been paid out of profits or gains brought into charge to tax and, subject to the next paragraph, Rule 21 of the General Rules shall apply accordingly,

(b) the amount of tax recoverable from the payer shall be tax on the payment which he has made calculated—

(i) if income tax was not deductible from the dividend—at the standard rate of income tax, and

(ii) if income tax was deductible from the dividend at a reduced rate—at a rate arrived at by deducting from the standard rate of income tax the rate of tax deductible from the dividend.

(2) In the foregoing subsection “annual payment” means any payment from which, apart from any insufficiency of profits or gains of the person making it, tax is deductible under Rule 19 of the General Rules.