Corporation Tax Act 2009 section 931R

Election that distribution should not be exempt

Section 931R allows a company receiving a distribution that would otherwise be exempt from corporation tax to elect for that distribution to be taxable instead.

• A recipient company can elect for any otherwise exempt distribution to be treated as taxable, for example to preserve double taxation relief or to satisfy the controlled foreign company acceptable distribution policy exemption
• The election must be made no later than the second anniversary of the end of the accounting period in which the distribution is received
• Where a dividend includes both an acceptable distribution policy (ADP) element relating to a controlled foreign company and a residual element, the company can elect for only the ADP portion to be taxable while keeping the remainder exempt
• The special ADP streaming provisions apply to dividends paid on or after 1 July 2009 for accounting periods that began before that date, in accordance with transitional rules