Published on 01 Jun 13
by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
Discretionary dividend shares or dividend access shares are shares on which dividends can be paid, at the discretion of the directors, to the exclusion of existing shares in a company. They are commonly used for three purposes, namely, asset protection, estate planning and flexibility. Their use raises several taxation issues, including direct value shifting, the debt/equity rules, dividend streaming, Div 7A, dividend stripping and general anti-avoidance issues. Further, their liberal use has now been curtailed by the issue of a recent taxpayer alert, TA 2012/4. This article discusses in detail each of the principal taxation issues raised by the use of such shares.
The author concludes that the use of these shares must be supported by credible evidence, and careful drafting of the documents relating to the creation and issue of the shares, as well as declarations of dividend and subsequent payment, are critical, as is TA 2012/4.
John Ioannou, CTA was admitted as a Solicitor in 2002 and is a Principal Lawyer at Macpherson Kelley. He has experience in the areas of taxation, structuring, commercial transactions, disputes, trusts and estates, succession and asset protection planning. John has a Bachelor of Arts, Bachelor of Laws and a Master of Law. He is Chair of the Tax Institute’s Queensland’s State Council in addition to being a State Councillor.
- Current at
04 November 2020