The ATO has today released TD 2014/D1 to address a particular type of scheme being used by certain taxpayers to obtain access to excess imputation credits.

A special market exists on the ASX that allows shares to be bought cum-div at the same time the share is trading ex-div on the general market.

The ATO is concerned that some taxpayers have entered into a scheme to effectively obtain a double dividend by using the timing of the two markets to circumvent the 45 day holding period rules.

The draft ruling appears to have a focus on SMSF’s as they are most likely to be the taxpayer who could obtain the most benefit from the scheme as a result of a lower, if not a nil tax rate (if in pension phase).

We would suggest applying to the ATO for a private ruling prior to lodging a income tax return for any clients who may have traded shares in the manner as outlined in the draft ruling.

You may wish to consider making a voluntary disclosure for any returns already lodged that may be affected.

If you have any questions we are more than happy to have a chat to discuss your particular circumstances.