Revenue Note for Guidance

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Revenue Note for Guidance

144 Distributions out of profits from trading within Shannon Airport

Summary

This section deals with distributions made out of profits from trading operations within Shannon Airport and which have been exempted from corporation tax. Such a distribution when made to another company is treated as if it is itself income from exempted trading operations of the recipient company. Individuals in receipt of such dividends are fully liable to income tax in respect of the dividends.

“Shannon Relief” was an exemption from corporation tax in respect of profits from certain trades carried on in the Shannon Airport Zone. The relief is not available after 6 April, 1990.

Details

Definitions

(1)exempted trading operations” are trading operations which were exempted trading operations for the purposes of Part V of the Corporation Tax Act, 1976 (that is, profits from trading operations within Shannon Airport).

other profits” includes distributions made by resident companies, but excludes distributions made out of income from exempted trading operations which is treated as if it were income from exempted trading operations carried on by the recipient company.

Distributions

(2) A distribution made partly out of income from exempted trading operations and partly out of other profits is treated as if it consisted of 2 distributions, one made out of income from exempted trading operations and the other made out of other profits.

(3)(a) A distribution out of income from exempted trading operations when made to another company is treated as if it is itself income from exempted trading operations of the recipient company.

Dividend warrants

(5) In the case of distributions made out of income from exempted trading operations, the statements required to accompany dividends and other distributions must show, where appropriate, that distributions are made out of income from exempted trading operations.

Attribution to accounting periods

(7) A distribution for an accounting period is regarded as made as far as possible out of the distributable income of that period, and any excess of the distribution over that income is attributed to the preceding accounting period or periods.

(9) Subsections (8) and (9) of section 140 apply to distributions out of relieved income. These provisions provide, respectively, for the apportionment of distributions where the period for which a company makes up accounts is partly within and partly outside an accounting period for corporation tax purposes, and for regarding a distribution which is not for any specified period as having being made for the accounting period in which it is made.

Distributable income

(8) The distributable income of a company for an accounting period is determined by the formula —

(R – S)

+

T

R

is the company’s total income chargeable to corporation tax for the accounting period (excluding corporation tax on chargeable gains) but including exempt income from stallion fees (section 231), income from commercial woodlands (section 232), income from greyhound fees (section 233), income from certain patent royalties (section 234) and Shannon exempt income (section 71 of the Corporation Tax Act, 1976).

S

is the company’s total corporation tax chargeable for the accounting period (excluding corporation tax on chargeable gains) after granting manufacturing relief (section 448), certain loss relief (paragraphs 16 and 18 of Schedule 32) and export sales relief (section 58 of the Corporation Tax Act, 1976), but before any set off or credit for tax, including foreign tax.

T

is the total distributions received by the company in the accounting period, including distributions made out of:

  • exempt income from stallion fees, greyhound fees or commercial woodlands (section 140(3)),
  • disregarded income from certain patent royalties (section 141(3)),
  • exempted income of certain mines (section 142(4)), or
  • income from exempted trading operations within Shannon Airport (section 144(3)(a)).

Relevant Date: Finance Act 2020