I move:—
(1) That in this Resolution the expression "the principal enactment" means Rule 20 of the General Rules applicable to Schedules A, B, C, D and E of the Income-Tax Act, 1918.
(2) That the provisions of the principal enactment shall, in relation to any dividend paid, whether before or after the passing of this Resolution, by any body of persons, be construed as authorising the deduction of tax from the full amount paid out of profits and gains of the said body which—
(a) have been charged to tax, or
(b) would fall, under the provisions of the Income-Tax Acts, to be included in computing the liability of the said body to assessment to tax for any year if the said provisions required the computation to be made by reference to the profits and gains of that year and not by reference to those of any other year or period.
(3) That for all the purposes of the Income-Tax Acts the amount of any dividend paid, whether before or after the passing of this Resolution, by any body of persons from which a deduction of tax is authorised by the principal enactment, as amended by the provisions contained in the immediately preceding paragraph of this Resolution, shall be deemed to be income of such amount as would, after such deduction of tax as is so authorised, be equal—
(a) if tax is deducted from such dividend, to the net amount received, and
(b) in every other case, to the amount received.
(4) Section 13 of the Finance Act, 1925 (No. 28 of 1925), shall have effect in relation to dividends with due regard to the provisions contained in the immediately preceding paragraph of this Resolution.
The necessity for this Resolution arises mainly out of a decision given in Great Britain by the House of Lords which upset the existing practice with regard to dividends declared by limited companies to be paid without deduction of income-tax in respect of (a) the assessing of such dividends to surtax, and (b) the granting of relief from income-tax regarded as having been borne on such dividends by smaller taxpayers. The practice has never been challenged in this country. The Resolution merely provides for the confirmation of the existing practice in respect of both the past and the future.