Section IV 1 — Income Tax Act 2007: Supplementary dividend holding companies

IV 1 Supplementary dividend holding companies When this section applies (1) This section applies when a supplementary dividend holding company derives a supplementary dividend in a tax year. Limit on amount (2) If the company has a tax loss that is a tax loss component under section IA 2(4) (Tax losses),

and is entitled to use the amount under section IA 3 , IA 4 , IC 5 , IS 3 , or IS 4 (which relate to a company’s use of tax losses), the maximum amount that it may use must be no more than the amount calculated using the formula— net income − credits + supplementary dividends tax rate. Definition of items in formula (3) In the formula,— (a) net income is the company’s net income for the tax year: (b) credits is the total amount of non-refundable tax credits and convertible credits that the company has available under Part L (Tax credits and other credits) to use in reducing its income tax liability: (c) supplementary dividends is the total amount of supplementary dividends that the company derives in the tax year: (d) tax rate is the relevant basic tax rate applying in the tax year. Calculating credits under Part L (4) Subsection (2) does not affect the calculation under Part L of the non-refundable tax credits and convertible credits of a supplementary dividend holding company. Defined in this Act: amount , basic tax rate , convertible credit , income tax liability , net income , non-refundable tax credit , supplementary dividend , supplementary dividend holding company , tax loss , tax loss component , tax year , Compare: 2004 No 35 s IF 7