Income Tax Act 2007 section 583

Manufactured payments exceeding underlying payments

Section 583 deals with what happens when a manufactured payment (a payment made to replicate a dividend, interest or overseas dividend) is larger than the actual underlying payment it is intended to represent.

• Where a manufactured payment exceeds the real dividend, interest or overseas dividend it replicates, the excess amount is separated out and treated differently from the main manufactured payment.
• The excess is not governed by the normal manufactured payment rules; instead it is treated as a separate fee or payment in its own right.
• This recharacterisation of the excess can affect both the payer's entitlement to tax relief and the recipient's (or underlying owner's) tax liability on the amount.
• The section also affects the amount of income tax that must be deducted at source and accounted for under the rules for withholding tax on manufactured payments.