(1) Part 13 of the Principal Act is amended -

(a) in section 434 -

(i) in subsection (2) by substituting "and subject to subsection (3A) the distributions of a company" for ", the distributions of a company", and

(ii) by inserting the following after subsection (3):

"(3A)

(a) Where a close company pays a dividend, or makes a distribution, to another close company, the companies may jointly elect, by giving notice to the Collector-General in such manner as the Revenue Commissioners may require, that the dividend, or as the case may be the distribution, is to be treated for the purposes of section 440 as not being a distribution.

(b) Where notice is given in accordance with paragraph (a), the dividend, or as the case may be the distribution, shall be treated -

(i) for the purposes of section 440 as not being a distribution, and

(ii) for the purposes of subsection (5) as not being franked investment income.

(c) An election by a company under paragraph (a) as respects an accounting period shall be included with the return under section 951 which falls to be made by the company for the accounting period.".

and