Income Tax Act 2007 section 581

Manufactured overseas dividends

Section 581 sets out how manufactured overseas dividends are treated for income tax purposes in the hands of the person who receives them or, if different, the person who owns them.

• A manufactured overseas dividend (MOD) is treated for income tax purposes as if it were a real overseas dividend paid by the overseas company concerned.
• Where the recipient holds the MOD on behalf of another person (such as a nominee), the tax treatment follows through to the underlying owner, even if the nominee is not itself an income tax payer.
• The MOD is deemed to be annual income from overseas securities for the purposes of the Income Tax Acts.
• These deeming provisions apply specifically to UK residents or persons carrying on business through a UK branch or agency.