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06 Nov 14 Imputation and the 45 day rule: qualified person and LIFO

To be entitled to a franking credit tax offset, a taxpayer is required to be a 'qualified person' in relation to a franked dividend. This ensures that only the true economic owners of shares or interests in shares obtain the benefits of the franking credits.

To be a qualified person, the taxpayer must satisfy the holding period rule by holding the shares or an interest in shares at risk for a continuous period of at least 45 days in the relevant qualification period. The 45 day period does not include the day that the entity acquired or disposed of the shares or interest in shares.

The last-in first-out (LIFO) rule applies when determining how long a taxpayer has held shares or an interest in shares when the primary securities and certain related securities have been bought and sold within the relevant qualification period.

For more ATO information about the operation of the rule, go here

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