45 day rule, page-5

Holding period rule

The holding period rule requires you to continuously hold shares 'at risk' for at least 45 days (90 days for preference shares) to be eligible for the franking tax offset. However under the small shareholder exemption, this rule does not apply if your total franking credit entitlement is below $5,000, which is roughly equivalent to receiving a fully franked dividend of $11,666 (based on the current tax rate of 30% for companies).

All this means is that you must continuously own shares at risk for at least 45 days, or 90 days for preference shares (not counting the day of acquisition or disposal) before being entitled to any franking tax offset.

Days on which you have 30% or less of the ordinary financial risks of loss and opportunities for gain from owning the shares, cannot be counted in determining whether you hold the shares for the required period.

The financial risk of owning shares may be reduced through arrangements such as hedges, options and futures.

If you acquire shares or an interest in shares and you have not already satisfied the holding period rule before the day on which the shares become ex-dividend*(the day after the last day on which acquisition of the shares will entitle you to receive the dividend), the holding period rule commences on the day after the day on which you acquired the shares or interest. You must hold the shares or interest for 45 days or, for preference shares, for 90 days (excluding the day of disposal). For each of these days you must have 30% or more of the ordinary financial risks of loss and opportunities for gain from owning the shares or interest.

http://www.ato.gov.au/individuals/PrintFriendly.aspx?ms=individuals&doc=/content/00237927.htm