ESM3580 - Managed Service Companies (MSC): Avoidance of Double Taxation
The legislation requires a company meeting the definition of an MSC to treat all payments to workers as earnings from employment. If, despite the specific requirements of the legislation, an MSC chooses to make dividend payments to the worker, then subsequently treats these payments as deemed payments and performs a DEP calculation accordingly, a double taxation charge may arise. To avoid double taxation of amounts treated as deemed payments, the legislation provides for a claim for relief to be made. If relief is given for a particular dividend, the recipient does not need to show it in their ITSA return.