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LP 5: Application of benchmark dividend rules and imputation credit ratio
or “Rules for companies paying extra dividends and tax credits”
You could also call this:

“Rules for paying extra dividends on some shares or to trust beneficiaries”

If you own a company that pays dividends, you can pay a supplementary dividend on some shares in a class of shares without breaking any rules. This doesn’t go against section 53 of the Companies Act 1993, your company’s constitution (unless it specifically says otherwise), or any other rules.

If you’re a trustee who receives a dividend, and you have to give it to a beneficiary as part of their income, you can give them a supplementary dividend too. This is okay and doesn’t break the rules of the trust.

Remember, a supplementary dividend is an extra payment on top of a regular dividend. It’s meant to help make up for any tax that might be taken off the regular dividend.

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Next up: LP 7: Requirements for supplementary dividend holding companies

or “Rules for certain dividend-holding companies no longer apply”
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Part L Tax credits and other credits
Tax credits for supplementary dividends

LP 6Deriving supplementary dividend and breach of terms of trust

  1. The payment of a supplementary dividend on only some shares in a class of shares does not constitute a breach of—

  2. section 53 of the Companies Act 1993; or
    1. the company’s constitution, unless the provision expressly refers to this subsection; or
      1. any other provision.

        1. If a trustee derives a dividend and is required under the terms of a trust to distribute it as beneficiary income to a beneficiary, the trustee’s distribution of a supplementary dividend does not breach the terms of the trust.

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        Notes
        • Section LP 6(1)(b): amended, on , by section 14 of the Companies Amendment Act 2013 (2013 No 111).