startNon-Qualifying Distributions
How To

Non-Qualifying Distributions

CCH Personal Tax
Last update: Reading time 2 minutes
DistributionsInvestments

    What is a non-qualifying distribution?

    A non-qualifying distribution is classed as a bonus issue of securities, redeemable shares, or the paying of a bonus that a company has received. Although taxable, you only pay lower rate tax on the amount of the non-qualifying distribution. You enter details relating to non-qualifying distributions on the Non-qualifying distributions/ Loans written off section.

    Loans Written Off

    A loan or an advance is treated as income when a Close Company writes it off either in part or full to an associate or participator. You do not have to pay tax on this income if you pay tax at the basic rate, however, you do if you are taxed at the higher rate. You should enter details relating to loans written of in the Non-qualifying distributions/ Loans written off section.

    Enter details relating to non-qualifying distributions on the Non-qualifying distributions tab, and click the Loans written off tab to enter details relating to cancelled loans.

    Add non-qualifying distribution

    1. Open Non-qualifying distributions/ Loans written off.

    2. Enter the name of the organisation that provided the income in Company.

    3. Briefly describe the income in Description.

    4. Complete the following fields:

    • Date paid: Enter the date within the current tax year.
    •  Joint?
    • Gross distribution - Enter the income received without tax deducted.
    • Notional Tax

    1. Click Save and Close.

    Losses

    1. Open Non-qualifying distributions/ Loans written off.
    2. Click the Loans written off tab.
    3. Click in an empty row under Source and enter the origin of the loan.
    4. Enter total loan amount in Net loan.
    5. Complete the following:
    • Notional Tax
    • Date written off

    1. Click Save and Close.

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