Taxpayers are not eligible for the tax offset or a refund of any excess imputation credits if certain anti-avoidance rules are triggered. The anti-avoidance rules include, among other things, the holding period rule and the related payments rule.
The holding period rule requires the taxpayer to hold the shares 'at risk' for at least 45 days (90 days for preference shares) during a defined qualification period (the 'primary' qualification period) to be eligible for a tax offset in relation to the imputation credit. The holding period rule only needs to be satisfied once for each purchase of shares.
The related payments rule applies to a taxpayer if the taxpayer makes, or is under an obligation to make, a 'related payment'. A related payment is a payment that passes on the benefit of the franked dividend to someone else. If the rule applies, and the taxpayer does not hold the shares 'at risk' for 45 days (90 days for preference shares) during a more limited qualification period ( the 'secondary' qualification period), the taxpayer is prevented from receiving a tax offset in relation to the imputation credits. The related payments test must be satisfied for each dividend payment.
For more information on these rules see the publication You and your shares 2005-06 (NAT 2632). To request a copy of the publication ring 1300 720 092.