On 28 June 2013, the Assistant Treasurer announced that the government will prevent dividend washing by inserting a specific integrity rule in the ITAA 1997: Assistant Treasurer's media release No 127 (28 June 2013).
The measure will be targeted to the period between the ex-dividend date and the record date of a membership interest. The record date is the day on which a company closes its share register to determine which shareholders are entitled to a dividend. Under Australian Securities Exchange procedures, the ex?dividend date comes four business days before the record date.
During this period, the rule will be activated to the extent that an entity, or an associate of an entity, disposes of the membership interest without the right to the dividend (that is, on an ex?dividend basis), and then acquires a substantially identical membership interest with the right to the dividend (that is, on a cum-dividend basis).
When the rule is activated, the entity would not be entitled to a franking credit tax offset on the distribution on the membership interest acquired with the right to the dividend, and the amount of the franking credit on the distribution on the acquired membership interest would not be included in the assessable income of the entity.
The measure will apply from 1 July 2013.