Ann: Quarterly Activities Report, page-44

tannon,
Not advice, but my understanding is the same as yours.
The problem is that the ATO can deem that a capital return is an unfranked dividend.
The process is that a company declares a capital return.
The company asks the ATO for a class ruling.
The ATO gives it a tick, or says no, this is an unfranked dividend.
First capital return is probably OK in most instances, i.e., HZN's $0.03 capital return last year.
Subsequent capital returns are much, much more likely to be deemed an unfranked dividend by the ATO.
The ATO have (deliberately?) made their decision making process opaque, i.e., there aren't any concrete guidelines.
The ATO has issued guidance on factors that they consider, but the tax industry still aren't confident on what is and isn't a capital return.
Most cases appear different shades of grey.
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