Income tax 2015

Is it a scheme?

Source: Taxation In Australia Journal Article

Published Date: 1 Jul 2015


Section 177EA, which is within Pt IVA (the general anti-avoidance provision) of the Income Tax Assessment Act 1936, enables the Commissioner of Taxation to make a determination denying imputation benefits to taxpayers resulting from franked distributions. The section centres around the existence of a scheme for a disposition of membership interests, or an interest in membership interests, in a corporate tax entity. Recently, the Commissioner has shown, through various ATO announcements, a tendency to use the section to attack various aspects of the dividend imputation system.

This article argues that the Commissioner's interpretation of s 177EA is too broad, and might catch arrangements and transactions which the section was not designed to cover. The article analyses the intended operation of section 177EA and its historical context. The authors then pose a basic scenario, and ask the reader to consider whether it would be regarded as falling within s 177EA.

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Income tax 2015

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