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5.6. Qualification of Specific Income Categories for Tax Purposes

Dividend Income

Dividend includes any distribution by a company to a member of such company in the capacity of a member (including any issues of bonus shares, reduction of capital, payment out of share premium account, the redemption of any share and cancellation of any share in liquidation). Note that where a company (a) disposes of an asset to a member, or an associate of a member, for less that its open market value; or (b) releases a liability of a member, or an associate of a member, for an amount less than the liability, then the transaction shall be treated as giving rise to a dividend paid to the member in an amount equal to the difference between the open market value of the asset, or the amount of the liability, and the consideration received by the company.

Interest Income

Interest income in relation to a financial transaction includes any discount, premium, foreign exchange hedging payment, swap payment, and any profit on the disposal or surrender of any financial instrument.

Royalty Income

Royalty income includes payment for - (a) the use of, or the right to use, any copyright, patent, design or model, plan, secret formula or process, trademark, or other like property or right; (b) the use of, or the right to use, any industrial, commercial or scientific equipment; (c) the supply of know-how; (d) the use of, or right to use, any cinematographic film, video tape, gramophone record, audio tape, compact disc, and any other like medium; (e) the supply of any assistance ancillary to the matters referred to above; or (f) any total or partial forbearance with respect to any matter referred to in paragraphs (a) to (e).

Income from Natural Resource

Income from natural resources means any payment for minerals or any living or non-living resource of the land, sea or seabed where the payment is calculated in whole or in part by reference to the quantity or value of minerals or living or non-living resource taken from the land, sea or seabed. of Kiribati.