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Dividend access shares and s 177E of Pt IVA: What does TD 2013/D5 say?


TD 2013/D5, released in June 2013, is concerned with the potential application of s 177E(1)(a) of the Income Tax Assessment Act 1936 (Cth) to a type of “dividend access share” arrangement described in the draft determination. In brief, the arrangement involves the payment of the accumulated profits of a company to the holder of a newly issued class of shares which carry the right to a dividend solely at the discretion of the company’s directors. However, the economic benefit of the profits continues to be enjoyed by the original shareholder(s) or their associates, but in a tax-free or substantially tax-free form.

This article first examines the type of arrangement described in the draft determination, and then considers the terms of s 177E. The article then looks at the facts and findings in two cases which have considered s 177E, before summarising and commenting on the conclusions expressed in the draft determination.

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Author Photo - Robert Allerdice CTA
Robert Allerdice CTA
Robert has tax experience spanning 33 years, and is currently The Tax Institute's Tax Consultant. In this role, Robert edits TAXVINE, The Tax Institute's weekly email newsletter, and reviews all articles for publication in two of The Tax Institute's journals, Taxation in Australia and the Tax Specialist. Robert also assists in The Tax Institute's Structured Education program, filling the roles of Advanced Tax Convenor and Applied Tax Convenor. Robert was admitted as a solicitor of the NSW Supreme Court in 1974 and practised as a tax lawyer from 1978 to 1993. He then accepted positions as Senior Lecturer, firstly with ATAX at the University of New South Wales, and then at the Law School at the University of Sydney. Robert joined The Tax Institute in June 2000. Current at 01 February 2012 Click here to expand/collapse more articles by Robert Allerdice.
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