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Non-portfolio dividends received by a resident company from a listed country company are non-assessable non-exempt income. These dividends are not assessable because they are paid out of:
- profits of a CFC that have been attributed to the resident company under the accruals tax measures - section 23AI
- profits that are treated as having been comparably taxed in a listed country - section 23AJ.
A non-portfolio dividend paid by a listed country company to a resident company is treated as paid first from profits that have been attributed to the resident company, and then from other profits.
Non-portfolio dividend paid from comparably taxed profits
On 1 January 2004, a company that is a resident of the United Kingdom paid a resident company a non-portfolio dividend of $10,000. None of the income of the UK company had been attributed under the accruals tax system.
In this case, the dividend will be non-assessable non-exempt income under section 23AJ.
non-portfolio dividend paid partly from profits taxed on an accruals basis
Resco, a resident company, has a CFC in a listed country. Attributable income of $10,000 from the CFC was included in Resco's assessable income for the 2001-02 income year.
The CFC then paid a dividend of $25,000 to Resco on 1 August 2003.
$10,000 of the dividend will be non-assessable non-exempt income under section 23AI as a distribution of attributed income. The $15,000 balance of the dividend will be non-assessable non-exempt income under section 23AJ.
Last modified: 05 Dec 2006QC 17522