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The ATO has published a Decision Impact Statement in relation to the decision of the Full Court of the Federal Court in Intoll Management Pty Ltd v FCT [2012] FCAFC 179; 2012 ATC 20-363.

The decision concerned the application of s 23AJ of the ITAA 1936 to dividends paid to a trustee, where that entity was the trustee of a trust which elected to be treated as the head company of a consolidated group. The Full Court held that s 23AJ applied.

The ATO's view of the decision is stated as follows:

"Where a trustee is paid a dividend from a non-resident in circumstances where that entity is the trustee of a trust that is the head of a consolidated group, the Commissioner will treat the dividend as having satisfied the requirement of the definition of 'non-portfolio dividend' in section 317 of the ITAA 1936, insofar as that section requires that the company (the trust) has a 'voting interest' in the relevant company that paid the dividend; specifically, that it is the 'beneficial owner of the shares', as required by former section 160AFB (now section 334A of the ITAA 1936).

The other requirements of section 23AJ and the definition of 'non-portfolio dividend' in section 317, including the requirement that the voting interest be held by the Australian entity amounts to 10% of the voting power as defined by s.334A of the ITAA 1936, will need to be considered on a case by case basis and properly satisfied."

The Commissioner will review Tax Determination TD 2008/25 and make changes as necessary to reflect the decision of the Full Court.

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