Annex 1: Minor changes in the law made by the Act: Change 81: Industrial and provident society payments: section 379
This change provides for share interest payable by registered industrial and provident societies to be treated as interest.
Section 486(4) of ICTA provides that share interest is chargeable under Schedule D Case III. The definition of “share interest” in section 486(12) of ICTA is “…any interest, dividend, bonus or other sum….”.  Section 486(4) of ICTA also provides that loan interest is chargeable under Schedule D Case III, as it would be in any event. As loan interest is true interest, which will be taxed under section 369 of this Act, there is no need to refer to it in this provision. There are three possible ways of dealing with share interest: include a specific tax charge for it, charge it under the same Chapter as interest or treat it as interest.
The rationale behind the source legislation is that this type of payment is much the same as an interest return on an investment. But it is not necessarily true interest and it is not likely to fall within any of the other types of income within Schedule D Case III. The approach adopted is consistent with that taken for other items of income; while these payments are not interest, they are taxed as if they were interest. So section 379(1) provides that such a payment “…is treated as interest for income tax purposes…”. This technically goes further than merely taxing it under the same Schedule and Case as interest.
This change has no implications for the amount of tax paid, who pays it or when.