This TD, released on Wed 26.2.2014, states broadly the Commissioner’s view that a dividend access share arrangement of the type described in the Determination is a scheme “by way of dividend stripping” or “in the nature of dividend stripping” within the meaning of s 177E of Pt IVA of the ITAA 1936. As a consequence, it states that Pt IVA is capable of applying to such arrangements.

The Determination states that an assertion of some non-tax related purpose for the arrangement by taxpayers will not be accepted by the ATO unless it is consistent with the objective facts of the case having regard to all of the evidence, and in any case, there is a good reason why the alleged purpose could not have been achieved in some “simpler and more commercially usual manner”.

In addition, the TD indicates that depending on the facts of the case, other provisions in Pt IVA may also apply to the arrangement (ie one or more parties who entered into, or carried out the scheme, did so for the sole or dominant purpose of enabling the taxpayer to obtain a tax benefit).

It was previously issued as Draft TD 2013/D5 and is largely the same.

DATE OF EFFECT: Applies both before and after its date of issue.

[LTN 38, 26/2/14]