Corporation Tax Act, 1976

Distributions.

76.—(1) Where a distribution for an accounting period is made by a body corporate in part out of income from exempted trading operations and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of income from exempted trading operations and out of other profits.

(2) (a) So much of any distribution as has been made out of income from exempted trading operations—

(i) shall not, subject to section 54 of the Finance Act, 1974 (charge to tax in respect of certain dividends received by directors and employees), be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a body corporate, be deemed for the purposes of this Part to be income from exempted trading operations.

(b) The recipient of any distribution, including part of a distribution treated under subsection (1) as a distribution, made out of income from exempted trading operations shall not be entitled to a tax credit in respect of that distribution.

(3) (a) Where a body corporate makes a distribution, including part of a distribution treated under subsection (1) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of income from exempted trading operations, the body corporate shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (2) (b) had not been enacted.

(b) Subsection (2) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of income from exempted trading operations.

(4) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (1) as a distribution, made by a body corporate out of income from exempted trading operations, section 5 (dividend warrants) and section 83 (5) (Schedule F) shall apply to the body corporate so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of income from exempted trading operations.

(5) In relation to any supplementary distribution under subsection (3), section 5 shall apply to the body corporate so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(6) Where a body corporate makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distribution over that income out of the most recently accumulated income.

(7) Section 64 (5) (6) (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for purposes of that section.

(8) In this section “other profits” includes a dividend or other distribution of a body corporate which is resident in the State but does not include a distribution to which subsection (2) (a) (ii) applies.