The Issues Log

Section / Provision Income Tax Act 2004

CD 14

Date Received

Section CF 3 1994 Act, CD 14 2004 Act
Section CF 3 (1)(b), when dealing with the carve out for returns of capital by companies, applies to cancellations of shares in whole but not in part.  It seems that the reference to cancellation (in whole but not in part) has not been carried over to the 2004 Act.

This would mean for example that where a company returned capital and cancelled a factional amount of a share, at this point in time the amount received for that cancelled fraction would be a dividend (though the amount paid for the cancellation of the whole share would not be subject to the various other rules being met)

CF 3 (1)(b)
Correct reference in the 1994 Act is to section CF 3 (1)(b) - any amount distributed upon the acquisition, redemption, or other cancellation of merits (in whole but not in part) by the company of any share in the company.

The Panel considers that there is no unintended legislative change under section CD 14 of the Income Tax Act and therefore no amendments are required in respect of CD 14 of the Income Tax Act 2004.