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5.6. Qualification of Specific Income Categories for Tax Purposes


The term "dividend" includes:

  • Any dividend paid by the company including a capital dividend;
  • Any other cash or non-cash distribution in respect of shares of the company, except repayment of share capital or an amount equal to issue of share capital for any new consideration;
  • Any redeemable share capital or security issued by the company in respect of shares in the company to the extent that such share capital or security is not issued for a new consideration; and
  • Certain kinds of expenditures when paid by a close company, (i.e., a company under the control of five or fewer participants/ directors and meeting certain other parameters), to a participator (i.e., a shareholder/ any person holding interest in the capital/profits of the company).


The term "royalty" includes amounts paid for the use or the right to use:

  • Copyrights, artistic or scientific work, patents, designs, plans, secret processes or formulae, trademarks, motion picture films, films or tape for radio and television broadcasting or other like properties or rights; and
  • Information concerning industrial, commercial or scientific knowledge, experience or skill.


The term "interest" includes:

  • Amounts earned on loans secured by bonds and similar instruments;
  • Any discount earned on treasury bills; and
  • Any charge or annuity other than an annuity paid out of a superannuation fund.

Service Fees

The term "service fees" includes management charges or charges for the provision of personal services, technical and managerial skills.

Capital Gains

The term "capital gains" includes gains arising from:

  • Any change in ownership of property arising due to a sale, disposal, transfer, realization or exchange etc.;
  • The surrender or relinquishment of any right or the transfer of some of the rights in any property;
  • The redemption of any shares, debentures, or other obligations;
  • The dissolution of a business or the liquidation of a company
  • The amalgamation or merger of two or more companies;
  • The formation of a company; and
  • Any reward or commission received pursuant to any transaction without being a party to it