The ATO on Thur 14.6.2012, issued Taxpayer Alert TA 2012/3 warning taxpayers of certain highly complex structured investment products which seek to transfer franking credits. It said its view on the operation of the imputation system and s 177EA of the ITAA 1936 is set out in Taxation Ruling TR 2009/3.
The ATO said the products claim to offer taxpayers exposure to a portfolio of listed securities and the benefits of franking credits whilst using a derivative instrument to transfer the risk of investing in the securities.
Among other things, the ATO said para 177EA(5)(b) of the ITAA 1936 may apply to deny the whole, or any part, of the imputation benefits claimed by the taxpayers in respect of distributions on the parcel of shares.
[LTN 113, 14/6]