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Ongoing Use of Dividend Access Shares

Published on 20 Oct 2013 | Took place at Grant Thornton, Brisbane, QLD

    Dividend access shares have been used in the past to improve a private company's asset protection and flexibility, as well as for estate planning and succession planning purposes. In the latter regard, their use has allowed corporate value to be earmarked to benefit the next generation as well as incentivising key employees. The release of Taxpayer Alert TA2012/4 flagged the ATO's interest in their use in particular circumstances and the subsequent release of Tax Determination TD 2013/D5 goes a step further to set out the Commissioner’s view that they should be used sparingly, if at all. For advisors of private and closely held taxpayers, this is not necessarily a satisfactory outcome.
    The purpose of this seminar was to allow practitioners who have used dividend access shares or are considering their use, to understand what the rules of the game are in the current climate.

Individual sessions

Ongoing use of dividend access shares

Author(s):  John Ioannou

This paper covers:

  • what exactly are dividend access shares?
  • what are the benefits of using them?
  • what are the issues: overview of value shifting, dividend streaming, debt/equity and Division 152
  • what is dividend stripping – first and second limbs
  • the Commissioner’s objectives in issuing the draft determination
  • what circumstances, combined with the use of dividend access shares, could result in a dividend strip?
  • what are the defences when confronted with dividend stripping in an ATO position paper?
Materials from this session: