Income Tax Act 2007 section 16

Savings and dividend income to be treated as highest part of total income

Section 16 establishes the ordering rules that determine the position of savings income and dividend income within a person's total income, which in turn determines the tax rates that apply to each type of income.

• Savings and dividend income are treated as sitting at the top of a person's total income, above non-savings income such as employment or trading income
• Where a person has both savings and dividend income, dividend income is treated as the very highest part, with savings income sitting below it but above all other income
• The ordering rules apply for virtually all income tax purposes, with a specific exception for the top slicing relief rules in sections 535 to 537 of ITTOIA 2005 relating to gains from life insurance contracts
• Dividend income that is relevant foreign income taxed on the remittance basis under section 832 of ITTOIA 2005 is excluded from the dividend income ordering rules in this section