14 Jun 12 Structured financial products that exploit franking credits and other tax benefits - Taxpayer Alert TA 2012/3
On 14 June 2012, the ATO issued Taxpayer Alert TA 2012/3 entitled "Structured financial products that exploit franking credits and other tax benefits".
The Taxpayer Alert describes certain complex highly structured investment products (a description of which is set out in the Taxpayer Alert) that seek, amongst other things, to transfer franking credits. These products claim to offer investors (the taxpayers) exposure to a portfolio of listed securities and the benefit of franking credits whilst using a derivative instrument to effectively transfer the risk of investing in those securities from investors to the derivative counterparty.
The ATO is currently reviewing these arrangements.