Maximum amount of total deduction for a supplementary dividend holding company

Amendment corrects a change to the formula used to calculate the annual total deduction for a supplementary dividend holding company. Applies 2008–2009 onwards.

Section LP 10(1) of the Income Tax Act 2007 has been amended to correct an unintended change in the formula in section LP 10(1), in which the parameter “company’s income” was incorrectly included in the numerator in the formula. This formula is used to calculate the annual total deduction for an income year of a supplementary dividend holding company.

The amendment ensures that section LP 10(1) correctly reflects the effect of the formula given in the corresponding provision of the 2004 Act (section LE 4(2)).

Application date

The amendment applies from the beginning of the 2008–09 income year. A savings provision applies to protect taxpayers from being adversely affected by the retrospective change, if the taxpayer has relied on the wording of the formula in section LP 10(1) of the 2007 Act in taking a tax position in a return of income filed before the last date of the period for which the savings provision applies.