9Reduction of liability where tax paid

##### 9 Reduction of liability where tax paid (1) Where: (a) in relation to a sale of shares, or of an interest in shares, under a scheme, recoupment tax is or was payable on a vendors taxable amount in relation to an amount of ordinary company tax or undistributed profits tax payable by a company in relation to a year of income; and (b) after the recoupment tax became payable, an amount (in this subsection referred to as the company tax payment) that is paid to the Commissioner is applied, or is deemed to have been applied, in reduction of ordinary company tax or undistributed profits tax, as the case may be, payable by the company in relation to the year of income; there shall be deemed to be applied, or to have been applied, in reduction of the recoupment tax that is or was payable on the vendors taxable amount: (c) if the vendors taxable amount is a primary taxable amount—the amount ascertained by multiplying the amount of the company tax payment by the apportionment factor in relation to the primary taxable amount; and (d) if the vendors taxable amount is a secondary taxable amount—the amount ascertained by multiplying the company tax payment by the reduction factor in relation to the secondary taxable amount. (2) For the purposes of subsection (1), the reduction factor in relation to a secondary taxable amount is the product of the numbers that are the relevant numbers in relation to: (a) the secondary taxable amount; (b) the vendors taxable amount by reference to which, or to recoupment tax on which, the secondary taxable amount was ascertained; and (c) any other vendors taxable amount by reference to which, or to recoupment tax on which, a vendors taxable amount to which paragraph (b) or this paragraph applies was ascertained. (3) For the purposes of subsection (2), the relevant number in relation to a primary taxable amount or a secondary taxable amount is: (a) in the case of a primary taxable amount—the apportionment factor in relation to the primary taxable amount; and (b) in the case of a secondary taxable amount—the number that bears to 1 the same proportion as the secondary taxable amount bears to the vendors taxable amount, or to the recoupment tax on a vendors taxable amount, as the case may be, by reference to which the secondary taxable amount was ascertained. (4) Where: (a) recoupment tax is or was payable on a secondary taxable amount and recoupment tax is payable on the vendors taxable amount by reference to which, or to recoupment tax on which, the secondary taxable amount was ascertained; and (b) an amount of recoupment tax on that vendors taxable amount is paid or an amount is deemed, by another application of this subsection, to have been applied in reduction of the recoupment tax payable on that vendors taxable amount; there shall be deemed to be applied, or to have been applied, in reduction of the recoupment tax that is or was payable on the secondary taxable amount, an amount equal to so much of the amount paid or deemed to be applied as mentioned in paragraph (b) as bears to that amount the same proportion as the secondary taxable amount bears to the vendors taxable amount, or to the recoupment tax by reference to which the secondary taxable amount was ascertained, as the case may be. (5) Where: (a) recoupment tax is or was payable on a vendors taxable amount and recoupment tax is payable on a secondary taxable amount ascertained by reference to the vendors taxable amount or to recoupment tax on the vendors taxable amount; and (b) an amount of recoupment tax on the secondary taxable amount is paid or an amount is deemed, by another application of this subsection, to have been applied in reduction of the recoupment tax payable on the secondary taxable amount; an amount equal to the amount paid or deemed to be applied as mentioned in paragraph (b) shall be deemed to be applied, or to have been applied, in reduction of the recoupment tax that is or was payable on the vendors taxable amount. (6) Where: (a) in relation to a purchase of shares under a scheme, recoupment tax is or was payable on a promoters taxable amount in relation to an amount of ordinary company tax or undistributed profits tax payable by a company in relation to a year of income; and (b) after the recoupment tax became payable, an amount (in this subsection referred to as the company tax payment) that is paid to the Commissioner is applied in reduction of ordinary company tax or undistributed profits tax, as the case may be, payable by the company in relation to the year of income; there shall be deemed to be applied, or have been applied, in reduction of the recoupment tax that is or was payable on the promoters taxable amount: (c) if the promoters taxable amount was ascertained under paragraph 7(1)(j) or (2)(j) and paragraph (e) of this subsection does not apply—an amount equal to 20% of the company tax payment; (d) if the promoters taxable amount was ascertained under paragraph 7(1)(k) or (2)(k) and paragraph (e) of this subsection does not apply—an amount equal to the company tax payment; and (e) if, by reason of an application of subsection 7(3), the promoters taxable amount is less than it would otherwise have been—such amount (if any) as the Commissioner determines, not exceeding the amount that would otherwise be applicable under paragraph (c) or (d), as the case may be. (7) Where: (a) in relation to a purchase of shares under a scheme, recoupment tax is payable on a promoters taxable amount in relation to an amount of ordinary company tax or undistributed profits tax payable by a company in relation to a year of income; and (b) an amount of recoupment tax on that promoters taxable amount is paid to the Commissioner; an amount equal to the amount paid shall, for the purposes of this Act (other than section 7) and the Assessment Act (other than paragraph (a) of the definition of the distributable income in subsection 103(1)), be deemed to have been applied in reduction of the ordinary company tax or undistributed profits tax, as the case may be, payable by the company in relation to the year of income and remaining unpaid at the time when the amount referred to in paragraph (b) is paid. (8) Where under this section an amount is deemed to be applied, or to have been applied, in reduction of the recoupment tax that is or was payable on an eligible taxable amount, being recoupment tax that includes or included late payment tax, the amount shall, to the extent to which it does not exceed the amount of that late payment tax, be deemed to be applied, or to have been applied, in reduction of that late payment tax and the balance (if any) shall be deemed to be applied, or to have been applied, in reduction of the remaining recoupment tax. (9) In this section, recoupment tax includes late payment tax.