Taxation Ruling TR 2010/4 was issued on 30 June 2010. It was previously released in draft form as TR 2009/D5. Its full title is "Income tax: capital gains: when a dividend will be included in the capital proceeds from a disposal of shares that happens under a contract or a scheme of arrangement".
This Ruling explains when, in certain cases, a dividend declared or paid:
- by an Australian resident company (the target company);
- to a resident shareholder who has disposed of shares in the target company under a contract of sale or a scheme of arrangement (the vendor shareholder),
will constitute capital proceeds under s 116-20 of ITAA 1997 "from the disposal" of the shares for the purposes of s 104-102. It also explains that in such cases, the dividend will not constitute part of the cost base of those shares for their purchaser.