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FA 2B: Stapled debt securities
or “Rules for company-issued debt securities attached to non-fixed-rate shares”
You could also call this:

“Tax treatment of dividends that recover share costs for business-owned shares”

This section talks about what happens when you get a dividend from shares you own as part of your business. It applies when the dividend you receive pays back the money you spent to buy the shares, and when you have control over the payment or it’s part of a plan that includes buying the shares and getting the dividend.

If you sell these shares and get less money than what you paid for them, the dividend is treated as if it’s part of the money you got from selling the shares. This helps make up for the fact that you didn’t get as much money from selling the shares as you spent to buy them.

Even though the dividend is treated this way, it’s still counted as a dividend that you received in that year. This means it’s still considered as income from dividends, not just as money from selling shares.

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Next up: FA 4: Recharacterisation of shareholder’s base: company reacquiring share

or “Company buying back shares: How it affects your remaining shares' cost”
Next

Part F Recharacterisation of certain transactions
Recharacterisation of certain commercial arrangements

FA 3Recharacterisation of certain dividends: recovery of cost of shares held on revenue account

  1. This section applies to the amount of a dividend derived from shares that are revenue account property of a person when—

  2. the payment of the dividend realises or recovers the price the person paid for the shares; and
    1. the payment is made at the person’s control or direction, or is part of a scheme that includes the acquisition of the shares and the payment of the dividend.

      1. The dividend is treated as an amount derived on a sale of the shares to the extent to which the actual amount realised by the person on the disposal of the shares is less than the cost to the person of acquiring the shares.

      2. Despite subsection (2), a dividend taken into account under this section remains a dividend derived by the person in the income year.

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      Notes
      • Section FA 3 list of defined terms control: repealed, on , by section 594 of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).