The public ruling states that the franking credit anti-avoidance rule will generally apply to a dividend washing arrangement to deny the franking credit benefit on the second parcel of shares.
The ruling follows the ATO’s warning in October 2013 that such “schemes are not allowable”.
ATO deputy commissioner Tim Dyce said the anti-avoidance legislation has always applied to dividend washing arrangements.
“This supports our position that getting two sets of franking credits on what is essentially one parcel of shares is not allowed,” he said.
Public consultation was undertaken on the draft ruling during early 2014, and more recently 3,000 letters were sent to taxpayers who may be involved in dividend washing arrangements, according to the ATO.
“During this time we have encouraged people to self-amend their tax returns with no penalty being imposed. This offer to all taxpayers has been extended until 28 May 2014,” said Mr Dyce.
