The ATO has reminded taxpayers that the Government announced a franking measure in last years Mid-Year Economic and Fiscal Outlook, which was to have retrospective effect back to the date of the announcement: 12 noon, 19 December 2016.
- The substance of the announcement was that it would introduce a specific measure to prevent a company from attaching franking credits, to distributions to shareholders, made outside or additional to the company’s normal dividend cycle, to the extent the distributions are funded directly or indirectly by capital raising activities that result in the issue of new equity interests.
- This measure is intended to address issues raised by the ATO in Taxpayer Alert TA 2015/2: Franked distributions funded by raising capital to release franking credits to shareholders.
- This measure will apply to distributions made after 12:00pm (AEDT) on 19 December 2016.
Administrative treatment
There are obvious difficulties for taxpayers in planning their affairs when they only have the announcement and no legislation to be guided by (a problem that has been bemoaned by taxpayers for decades, and, from time to time, by politicians from both sides of the fence).
In any event, this is a problem the ATO has had to administer for ages and it has some procedures for dealing with it.
- For practical guidance on our administrative approach to law change proposals with retrospective effect, please see Administrative treatment of retrospective legislation.
The ATO invites taxpayers, whose circumstances might be within scope of the announced measure, to contact them and discuss your situation with them. Taxpayers can do this by emailing PGIAdvice@ato.gov.au.
Legislation and supporting material
This measure is not yet law and is subject to the normal parliamentary process.
More information
- Mid-Year Economic and Fiscal Outlook 2016-17 (see Appendix A, Revenue Measures, pages 112 to 113).
[FJM; ATO website: Announcement; LTN 67, 10/4/17]