Section OC 28 — Income Tax Act 2007: FDPA benchmark dividend rules

OC 28 FDPA benchmark dividend rules When this section applies (1) This section applies when an FDPA company pays a dividend on more than 1 occasion during a tax year. Subsection (2) overrides this subsection. Exclusions (2) This section does not apply to a dividend that is the subject of an election by— (a) a statutory producer board under sections OB 73 to OB 75 (which relate to statutory boards’ notional distributions); and (b) a co-operative company under sections OB 78 to OB 80 (which relate to co-operative companies’ notional distributions). Benchmark dividend (3) The first dividend of the tax year is the benchmark dividend. Same FDP ratio (4) The FDP ratio of a dividend paid after the benchmark dividend must be the same as the FDP ratio of the benchmark dividend. This subsection is modified by section OZ 9 (Benchmark dividends: ratio change). Breach of FDP ratio (5) A breach of subsection (4) gives rise to an FDP debit under section OC 22 (table O4: FDP debits, row 11 (breach of FDP ratio)) for an amount calculated using the formula in section OC 22(1). Ratio change declaration (6) An FDPA company may notify the Commissioner that the dividend is not part of an arrangement to obtain a tax advantage by providing a ratio change declaration stating that the dividend is not part of an arrangement to which sections GB 35 and GB 36 (which relate to imputation arrangements to obtain tax advantage) apply. The company must provide the declaration before the dividend is paid, or by a later date if the Commissioner allows. For the purposes of this subsection, the dividend must not be part of an arrangement to obtain a tax advantage. This subsection overrides subsection (5). Consolidated group (7) This section applies, modified as necessary, to a consolidated group as if it were a single company. Group debit (8) Under section OP 54 (When credits and debits arise only in consolidated FDP group accounts), a breach of an FDP ratio alternatively gives rise to an FDP debit under section OP 72 (Consolidated FDPA breach of FDP ratio) (table O22: FDP debits of consolidated group, row 10 (breach of FDP ratio)) if the company is part of a consolidated group. Treatment of group dividends (9) In the application of this section to a consolidated group, a dividend paid between group companies is disregarded. Defined in this Act: amount , arrangement , benchmark dividend , Commissioner , company , consolidated group , co-operative company , dividend , FDP , FDP debit , FDP ratio , FDPA company , pay , statutory producer board , tax advantage , tax year , Compare: 2004 No 35 ss MG 8(2), (3) , MG 16A(1) Section OC 28(4): amended, on 1 October 2010, by section 13 of the Taxation (Budget Measures) Act 2010 (2010 No 27).