Tax exemption of equity income and domestic real estate income

(1) Insofar as the distributed and deemed-distributed income includes capital income under section 43(1), first sentence, nos. 6 and 9 and second sentence of the Income Tax Act, section 3 no. 40 of the Income Tax Act applies. The first sentence does not apply to profits from the disposal of units in investment funds within the meaning of section 16(1) no. 3 in conjunction with section 2(13), and in the cases of section 30(3), first sentence, nos. 1 and 2 and second sentence.
(2) Insofar as the distributed and deemed-distributed income includes capital income under section 43(1), first sentence, no. 6 and second sentence of the Income Tax Act, section 8b of the Corporate Income Tax Act is applicable under the conditions of section 30(2). Insofar as the distributed and deemed-distributed income includes capital income under section 43(1), first sentence, no. 9 and second sentence of the Income Tax Act, section 8b of the Corporate Income Tax Act is applicable. The second sentence does not apply to profits from the disposal of units in investment funds within the meaning of section 16(1) no. 3 in conjunction with section 2(13), and in the cases of section 30(3), first sentence, nos. 1 and 2 and second sentence.
(3) Subsections (1) and (2) do not apply where it concerns capital income under section 43(1), first sentence, nos. 6 and 9 and second sentence of the Income Tax Act from a corporation, association of persons or fund of assets not tax-preburdened. Corporations, associations of persons or funds of assets are deemed not tax-preburdened where they are not subject to income taxation, are personally exempt from income taxation, or are exempt from income taxation to the extent that they make distributions. The first sentence does not apply to preburdened REIT dividends under section 19a of the REIT Act.
(4) Where the distributed or deemed-distributed income includes domestic equity income that was taxed by the special investment fund, 60 per cent of that distributed or deemed-distributed income is tax-free. By way of derogation from the first sentence, the domestic equity income included in distributed or deemed-distributed income is fully exempt from tax where 1. the investor is subject to the Corporate Income Tax Act, and 2. the special investment fund has no entitlement to a reduction under a double taxation agreement on account of a maximum withholding tax rate of below 15 per cent.
(5) Where the distributed or deemed-distributed income includes domestic real estate income or other domestic income that was subject to corporate income tax at the level of the special investment fund, 20 per cent of that distributed or deemed-distributed income is tax-free. Subsection (4), second sentence applies accordingly.