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The Attribution Regime for Individuals was introduced for companies with accounting periods commencing on or after 6 April 2008 and will be abolished with effect for accounting periods commencing after 6 April 2012.
The ARI applies to all resident individuals with an interest in a relevant company.
Resident individuals with an interest in a relevant company will be charged to income tax on their share of the attributed profits from that company. This will in essence remove the corporate veil for income tax purposes as individuals will be taxed directly as if they had received the income attributable to their share of the annual profits of a relevant company. This is known as the attributed income.
A composite voucher has been issued by the Division which can be issued by companies to shareholders to define the amount and type of distribution that they have received from the company. This can be used as a Certificate of Attribution. The composite voucher can be found here
The Division has issued the following documents relating to the ARI
| Document Name | Number | Date of issue |
|---|---|---|
| Attribution Regime for Individuals | GN 41 | 3 November 2009 |
| Overview of the Attribution Regime for Individuals | GN 42 | 3 November 2009 |
| Distributions from Company Reserves | PN156/09 | 6 April 2009 |
| Income Tax (Attributed Profits) (De Minimis Limit) Regulations 2008 | SD 241/08 | 21 May 2008 |
| Income Tax (Attributed Profits) (Relevant Company) Order 2008 | SD 240/08 | 21 May 2008 |
| Income Tax (Attributed Profits) (Groups) Regulations 2008 | SD 239/08 | 21 May 2008 |
| Income Tax (Attributed Profits) (Certificate) Order 2008 | SD 238/08 | 21 May 2008 |
| Income Tax (Distributable Profit) (Prescribed Deductions) Order 2008 | SD 237/08 | 21 May 2008 |
| Income Tax (Calculation of Attributed Profit) Regulations 2008 | SD 236/08 | 21 May 2008 |
| Income Tax (Attributed Profits) (Temporary Taxation) Order 2007 | SD 928/07 | 11 December 2007 |
The following amendments and additions have been made to GN 41, Attribution Regime for Individuals, in the November 2009 release (the previous versions can be found in the "Archive of Documents" at the bottom of this page):
| Section | Details of Change |
|---|---|
| 4.4 | New section added to confirm criteria for trading corporate taxpayers to elect to pay tax at 10% |
| 7 | Various minor wording changes to the sections covering groups and minority shareholders |
| 8 | New section setting out the practices for relevant companies where a corporate shareholders holds less than 75% of the shares |
| 11 | Minor amendments to the wording of this section, no significant changes made. |
| 13.1 | New section setting out the practice regarding the interaction between ARI and Payment on Account |
| 16 | Amended to clarify treatment where a member of a relevant company dies. |
| 17 | Distributions from reserves – refers to GN38 for details of practices relating to distributions from reserves |
| 19 | Section expanded to include more information relating to trust management expenses |
| Appendix D | New appendix - composite voucher |
| Appendix E | Further examples of ARI calculations for a variety of scenarios, including mixed share classes and groups with minority shareholdings. |
The following amendments and additions have been made to GN 42, Overview of the Attribution Regime for Individuals, in the November 2009 release (the previous versions can be found in the "Archive of Documents" at the bottom of this page):
| Section | Details of Change |
|---|---|
| General | Order of the contents of the guide has been changed to focus on continuing resident members before those who have ceased residence or have died. |
| 4 | Explains when and how to include attributed income on a resident member’s income tax return. |
| 5 | Sets out the recommendations for declaring dividends received from companies where their status for ARI is not clear and what will happen to assessments etc. when the status is confirmed |
| 6 | Sets out the interaction between attributed income and payment on account, including Assessor’s power to include profits to be attributed |
| 7 | Confirms how attributed income and subsequent distributions will be treated in relation to the personal allowance credit |
Archive of Documents
| Name | Number | Replaced |
|---|---|---|
| Attribution Regime for Individuals | GN 41 | August 2008 |
| Overview of the Attribution Regime for Individuals | GN 42 | August 2008 |
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