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  • Holding period rule (from 1 July 1999)

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Under proposed legislation contained in the New Business Tax System (Miscellaneous) Bill (No. 2) 2000, from 1 July 1999 the relevant threshold becomes $5,000. If these proposals affect you, please contact your professional adviser or the Australian Taxation Office. The following is an explanation of the rule contained in the Bill introduced into Parliament on 13 April 2000. The rule applies to shareholders whose total franking rebates for the year from all franked dividends, received directly or indirectly through partnerships or trusts, exceed the threshold of $5,000.

    Unless you were contractually obliged to acquire them before 7.30 p.m. AEST on 13 May 1997, you must own shares you acquire on or after 1 July 1997 for at least 45 days-not counting the day of acquisition or disposal-before you are entitled to a franking rebate from franked dividends paid or credited on the shares. If the shares are preference shares you must hold them for at least 90 days, again not counting the day of acquisition or disposal.

    The relevant holding period for shares and preference shares has to occur during the 'qualification period'. The qualification period begins on the day after you acquire the shares and ends on the 45th day-or 90th day for preference shares-after the day on which the shares or interest become 'ex-dividend'.

    A share or interest in a share becomes ex-dividend on the day after the last day on which you can acquire the shares or interest in a share so as to entitle you to a dividend or distribution in respect of those shares or interest.

    Example

    Leanne acquires shares on 5 July 1999 and the ex-dividend day is 8 July 1999. In order to be a qualified person in relation to the franked dividends paid on the shares-that is, entitled to claim the franking rebate arising from the franked dividends-Leanne will have to hold the shares until 20 August 1999.

    Last modified: 05 Dec 2006QC 16138