Holding period rule
The holding period rule requires you to hold shares ‘at risk’
for at least 45 days (90 days for preference shares) to be
eligible for the franking tax offset. However, 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 own shares 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.
You have to satisfy the holding period rule once only for
each purchase of shares. You are then entitled to the
franking credits attached to those shares, unless the
related payments rule applies
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