Taxes Consolidation Act 1997 section 111AV

Election to apply taxable distribution method

Section 111AV allows an entity that owns part of an investment entity to elect to apply a taxable distribution method, reducing exposure to top-up tax where distributions are taxed at or above the minimum rate.

• Distributions from the investment entity are included in the owner entity's qualifying income, provided the owner is not itself an investment entity, and any creditable covered taxes of the investment entity are also included in the owner's income and adjusted covered taxes.
• Any undistributed net qualifying income from the third year before the current fiscal year is treated as qualifying income of the investment entity for the current year, and a top-up tax equal to that income multiplied by the minimum tax rate applies.
• The investment entity's qualifying income or loss and related adjusted covered taxes are excluded from the effective tax rate calculation, except for covered taxes creditable against the owner's distribution tax liability.
• If the election is withdrawn, the owner's share of undistributed net qualifying income at the end of the year before the withdrawal is treated as qualifying income of the investment entity, with top-up tax calculated at the minimum rate.

---