Offshore funds - dividend distributions
The measures
Individuals in receipt of dividend distributions from offshore funds may now be able to benefit from a 10% dividend tax credit.
However, where the offshore fund is substantially (more than 60 per cent) invested in interest-bearing assets, individuals receiving distributions will be treated for tax purposes as having received interest and not a dividend. In that case, no tax credit will be available and the applicable tax rates will be those applying to interest.
Who will be affected?
Individuals in receipt of distributions from offshore funds which are largely invested in equities. This will apply even if the individual's holding in the offshore fund exceeds 10%.
When?
The rules apply from 22 April 2009.
The income tax relief which is restored as a result of these rules will no doubt come as welcome news to individuals investing in certain offshore funds.
