franked dividends. hold for 45 days, page-9

re: franked dividends. hold for 47 days Can be any 47 days and can include day before div and then days after.

http://XXX.ato.gov.au/individuals/content.asp?doc=/content/8651.htm

What are the anti-avoidance rules?
Resident individuals are not eligible for the tax offset or a refund of excess franking credits if the anti-avoidance rules are triggered. The anti-avoidance rules include the holding period rule and the related payments rule.

The holding period rule requires the individual to hold the shares 'at risk' for at least 45 days (90 days for preference shares) (not counting the day of acquisition or disposal) to be eligible for a tax offset in relation to the franking credit. The holding period rule only needs to be satisfied once for each purchase of shares. This rule does not apply if the individual's total franking credits entitlement for the year of income is below $5,000.

The related payments rule applies to an individual if the individual makes, or is under an obligation to make or is likely to make a 'related payment'. A related payment is a payment that passes on the benefit of the franked dividend to someone else. If the rule applies, and the individual does not hold the shares 'at risk' for a period of 45 days (90 days for preference shares) the individual is prevented from receiving a tax offset in relation to the franking credits. The related payments test must be satisfied for each dividend payment and distribution. This rule applies if the individual’s total franking credits entitlement for the year is below $5,000.

These two rules also apply in relation to beneficiaries of trusts and partners of partnerships.

If you are a partner in a partnership or a beneficiary of a trust, both you and the partnership or trust must satisfy the two rules to be eligible for the franking tax offset or refund of excess franking credits.

For more information on the two rules, see publication You and your shares (NAT 2632)

Small shareholder exemption
The small shareholder exemption imposes a maximum franking tax offset ceiling of $5,000 on all of your franking tax offset entitlements in a given year, whether received directly or indirectly through a trust or partnership.

If you qualify for the small shareholder exemption, you may still be entitled to a franking tax offset if:

you have failed the holding period rule, and
the related payments rule does not apply to you.
For more information on these rules see the publication You and your shares.

If you have more than $5,000 in franking credits from a single parcel of shares and did not satisfy the holding period and the related payments rules in respect of those franking credits, you cannot claim the small shareholder exemption and restrict your claim of franking credits to a maximum of $5,000. In other words, you have no entitlement to a franking tax offset for the entire franking credits. Because entitlement to a franking tax offset has been denied, there is no need for you to include the affected franking credits in your assessable income.

If you have more than $5,000 of franking credits from a portfolio of shares, you are entitled to a franking tax offset only in respect of those shares that satisfy the holding and related payments rule. For more information refer to You and your shares.