Interim dividend becomes taxable only on actual payment, as directors may rescind the resolution before payment.

An interim dividend declared by directors under the company articles is not treated as the shareholder's income until actual payment is made. The governing principle is that, unlike a dividend declared in general meeting, an interim dividend remains revocable before payment, and the use of the word "declare" in the directors' resolution does not give it finality. On that basis, the tax point arises only on payment during the accounting period, and the dividend is includible in income for the relevant year when paid.

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Issues: Whether an interim dividend declared by the directors was liable to be included in the assessee's income for the relevant assessment year when payment was made during the accounting period.

Analysis: The question turned on the legal effect of the directors' resolution under the company articles governing interim dividends. A dividend declared in general meeting becomes income on declaration, but an interim dividend stands on a different footing because the directors' power to pay or declare such a dividend remains revocable before actual payment. The wording of the relevant articles did not confer any greater finality merely because the directors used the word "declare" instead of "pay". The governing principle, as applied here, was that an interim dividend does not become the shareholder's income until it is actually paid, and a prior resolution may be rescinded before payment.

Conclusion: The interim dividend was assessable in the relevant year on actual payment, and the reference was answered in the affirmative against the assessee.

Ratio Decidendi: An interim dividend declared by directors under the articles does not become the shareholder's income until payment is made, because the directors may rescind the resolution before payment.

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