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5.6. Qualification of Specific Income Categories for Tax Purposes

Dividend Income

Dividend means the distribution of profits by a body to a member and includes the following:

  • An amount returned by a body to a member in respect of a membership interest on a partial reduction in the capital of a body to the extent that the amount returned exceeds the value by which the nominal value of the membership interest was reduced;
  • An amount returned by a body to a member on redemption or cancellation of a membership interest, including on liquidation of a company or termination of a partnership, to the extent that the amount returned exceeds the nominal value of the membership interest;
  • The amount of any loan, payment for an asset or services, value of any asset or services provided or any debt obligation released, by a body to, or in favour of, a member or a related person of a member to the extent that the transition is, in substance, a distribution of profits.

Interest Income

Interest means a interest payable on any loan and includes periodic or lump sum amount, payable as a consideration for the use of money or being given time to pay. Interest also includes a discount, premium, or other functionally equivalent amounts.

Royalty Income

Payment of royalties is compensation (periodic or lump sum) for use of or right to use a copyright or a similar intangible right, that has been used or transferred and also includes the supply of assistance, that is ancillary and subsidiary to the application and enjoyment of the said asset or right.

Technical Fee

Technical fee means a fee for technical, professional or consultancy services, including a fee for the provision of services of technical or other personnel.  

Management Fee

Management fee means an amount as consideration for the rendering of any managerial or administrative service but does not include employment income.