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13 Mar 14 10% voting power in Article 10.2(a) of Australia UK DTA - TD 2014/D9

On 12 March 2014, the ATO released for public comment by 11 April 2014 draft Taxation Determination TD 2014/D9.

It is entitled "Income tax: does a United Kingdom resident company (UK Co), that beneficially owns a dividend paid by an Australian resident company (Aus Co), hold directly at least 10% of the voting power in Aus Co for the purposes of Article 10.2(a) of the United Kingdom Convention (the Convention)1 in the following circumstances: (a) a nominee shareholder owns shares carrying at least 10 per cent of the voting power in Aus Co for the benefit of UK Co; and (b) the nominee undertakes to UK Co to exercise all rights of voting and other privileges attaching to the shares in such manner as UK Co shall direct or approve?"

The answer given to the question posed is as follows:

"Yes. UK Co, which beneficially owns a dividend paid by Aus Co, 'holds directly' at least 10 per cent of the voting power in Aus Co for the purposes of Article 10.2(a) of the Convention in the following circumstances:

(a) a nominee shareholder owns shares carrying at least 10 per cent of the voting power in Aus Co for the benefit of UK Co; and
(b) the nominee undertakes to UK Co to exercise all rights of voting and other privileges attaching to the shares in such manner as UK Co shall direct or approve."


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