Dividend streaming (anti-streaming rules)
Broadly speaking, any strategy directed at avoiding wastage of imputation benefits by directing the flow of franked distributions to members who can most benefit from them to the exclusion of other members, may amount to dividend streaming.
The benchmark rule is a structural rule that is designed to prevent streaming. As well as this rule, there are some more specific anti-streaming rules and a general one as outlined below:
- Linked distributions: a member of one entity can choose to receive a distribution from another entity that is franked to a greater or lesser extent than distributions made to other members of the first entity.
- Substitution of tax-exempt bonus shares: members of an entity can choose to receive tax-exempt bonus shares instead of a distribution from the entity.
- Distribution streaming: a corporate tax entity streams distributions to give those members who benefit most from franking credits a greater imputation benefit than those who benefit less.
There is also an anti-avoidance rule which can apply in certain types of situations against streaming activity, depending on the circumstances of the particular case.