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5.6. Qualification of Specific Income Categories for Tax Purposes


Dividend includes the following:

  • distribution of profits;
  • the capitalisation of profits by the company, whether by way of a bonus share, bonus unit, or bonus debenture issue, or increase in the amount paid-up on a membership interest, or otherwise involving a credit of profits to a share or trust capital account, but does not include a bonus share, bonus unit, or bonus debenture paid out of a share or unit premium account;
  • an amount returned to a member of the company in respect of a membership interest in the company on a partial reduction in capital or on redemption or cancellation of a membership interest in the company, including on liquidation, dissolution, or termination of the company, or on reconstruction, reorganisation, or amalgamation of the company;
  • the amount of any loan, payment for an asset or service, value of any asset or service provided or any debt obligation released, by the company to, or in favour of, a member of the company or an associate of a member to the extent to which the transaction is, in substance, a distribution of profits.


Interest includes an amount, described as interest, discount, premium, or otherwise, whether periodical or a lump sum, as consideration for the use of money. It also includes a commitment, guarantee, service, or similar fee payable in respect of a debt or other instrument or agreement.  


Royalty is a consideration for the use of, or right to use any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right, any industrial, agricultural, commercial, or scientific equipment. It also includes consideration for the supply of any scientific, technical, commercial, or industrial information, techniques, knowledge, experience, or skill, including know-how, the use of, or right to use motion picture films, videotapes, compact discs, digital video discs, video compact discs, or similar items in connection with television, radio, or internet broadcasting, etc.

Service Fees

Service fees include the consideration for the rendering of any managerial service (excluding employment income), professional or other independent services, or any other contract for services.

Capital Gains

Gains made on the disposal of a capital asset is known as capital gain. Capital asset includes real property or interest in real property, a vessel, a yacht, a membership interest in a company, security or other financial asset, an intangible asset, etc. and an option, right or interest in an any of these assets.