CTM18600 - Shadow ACT: computation of: company ceasing to be a member of a group
SI1999/358, Reg. 11 (7)
Where a company ceases to be a member of a group, shadow ACT is computed as if the part of the accounting period before it ceased to be a member and the part after were two separate accounting periods.
Example
Accounting Period 1.1.2005 鈥� 31.12.2005.
Company makes a distribution of 拢8,000. It receives a dividend from a non-associated company which, with the tax credit, totals 拢32,000. It has surplus franked investment income (FII) brought forward of 拢20,000.
Accounting Period 1.1.2006 鈥� 31.12.2006.
Company pays a dividend of 拢80,000. It receives a dividend from a non-associate, which with the tax credit totals 拢24,000.
Accounting Period 1.1.2005 鈥� 31.12.2005, (calculation of surplus FII).
Surplus Fll brought forward 拢20,000
Fll 拢32,000 x 9/8 = 拢36,000
Total 拢56,000
Less
Distribution 拢8,000
+ Shadow ACT 拢2,000
Franked distribution 拢10,000 拢10,000
Surplus Fll 拢46,000
触鈥攟
Accounting Period 1.1.2006 鈥� 31.12.2006, (calculation of shadow ACT).
Distribution 拢80,000
Shadow ACT theron 拢20,000
Franked distribution 拢100,000
Fll 拢24,000 x 9/8 = 拢27,000
+ Surplus Fll 拢46,000 拢73,000
Excess 拢27,000
触鈥攟
Shadow ACT is 25% of the amount which, when the shadow ACT is added to it, is equal tothe excess = 拢5,400.