Section 343: deemed accumulated income

Introduction

Section 343 identifies the residual portion of regular income that is treated as deemed accumulated income, up to 15% of regular income, after application and section 342 accumulation.

If invested or deposited, that residual amount must use a section 350 permitted mode; it is distinct from an accumulation filed under section 342.

Key takeaways

What Section 343 says

Sub-section (1): the regular income, as reduced by the application of income under Section 341 and the income accumulated or set apart under Section 342, to the extent of 15% of regular income, is considered deemed accumulated income - and where such deemed accumulated income is invested or deposited, it must be invested or deposited in a mode permitted under Section 350.

Sub-section (2): deemed accumulated income under this section is not considered accumulated income for the purposes of Section 342 - it is a separate concept and does not need the Section 342(1) statement or the 5-year accumulation procedure.

Calculate the residual 15% amount

Start with regular income, then reduce it by section 341 application and section 342 accumulation. The residual qualifies as deemed accumulated income only up to 15% of regular income.

Deemed accumulation is distinct from section 342

Subsection (2) says the section 343 amount is not treated as section 342 accumulated income. If the residual is invested or deposited, subsection (1) points to the modes allowed by section 350.

Step-by-step flow for working out deemed accumulated income under Section 343

1. 1

   Start with the regular income of the tax year

   Take the regular income of the registered non-profit organisation for that tax year.

2. 2

   Reduce it by application and accumulation

   Subtract the income applied under Section 341 and the income accumulated or set apart under Section 342.

3. 3

   Compare the balance with 15% of regular income

   Under Section 343(1), the balance is deemed accumulated income only up to 15% of regular income.

   • Balance is 15% or less: The whole balance is deemed accumulated income.
   • Balance is more than 15%: Only 15% of regular income is deemed accumulated; the excess is outside Section 343 (see Section 336).
4. 4

   Is the deemed accumulated income invested or deposited?

   • Yes: It must be in a mode permitted under Section 350 (Section 343(1)).
   • No: Section 343 does not itself require investment, but if it is invested it must follow Section 350.
5. 5

   Keep it separate from Section 342 accumulation

   Under Section 343(2), deemed accumulated income is not accumulated income for Section 342. It needs no Section 342 statement and is not tracked as a Section 342 tranche.

Practical checklist

Frequently asked questions