(1) Section 434 of the Principal Act is amended -

(a) in subsection (1) -

(i) by the substitution of the following for the definition of "distributable income":

"'distributable income' means the aggregate of the amounts of the distributable trading income and distributable estate and investment income;",

(ii) by the insertion after the definition of "estate income" of the following:

"'franked investment income' excludes -

(a) a distribution made out of exempt profits within the meaning of section 140,

(b) a distribution made out of disregarded income within the meaning of section 141 and to which subsection (3)(a) of that section applies, and

(c) a distribution made out of exempted income within the meaning of section 142;

'income' of a company for an accounting period means the income as computed in accordance with subsection (4);",

and

(iii) by the insertion of the following after the definition of "investment income":

"'relevant charges', in relation to an accounting period of a company, means charges on income paid in the accounting period by the company and which are allowed as deductions under section 243, other than so much of those charges as is paid for the purposes of an excepted trade within the meaning of section 21A;",