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Attribution Regime for Individuals

The Attribution Regime for Individuals was introduced for companies with accounting periods commencing on or after 6 April 2008 and was 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 NameNumberDate 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 Downloadable Documents):

SectionDetails 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 Downloadable Documents):

SectionDetails 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
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