Introduction Overview Section 32: Meaning of “augmented profits”
131.This section defines the augmented profits which are compared with the limits in sections 19 and 24 to determine whether or not small profits rate is due. It is based on section 13 of ICTA.
132.In section 13 of ICTA the word “profits” is used in a special sense to mean the total of what are usually referred to as profits and some franked investment income. This may lead to confusion. So this section uses “taxable total profits” (see section 4(2)) to mean the amount on which corporation tax is charged and introduces a new term “augmented profits” which is used only in this Part.
133.Subsection (1) is the basic definition of “augmented profits”. In determining whether a company’s profits are “small” for the purposes of this Part, dividends receivedare taken into account, even though those dividends are not charged to corporation tax.
134.Subsection (2) excludes what is usually known as “group income”. This comprises:
	distributions from companies in the same group as the receiving company; and
	distributions from trading companies (“quasi-subsidiaries” – defined in subsection (3)) which are owned by a consortium of which the receiving company is a member.
135.The meanings of “trading company” and “relevant holding company” in subsection (2)(b) are set out in section 33(4).