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Dividend washing integrity rule

Last updated 27 June 2018

The dividend washing integrity rule prevents you from claiming franking credits where you have received a dividend as a result of dividend washing.

Dividend washing occurs where you, or an entity connected to you, claim two sets of franking credits by:

  • selling shares that are held on the Australian Securities Exchange (ASX) and have become ‘ex-dividend’, and then
  • purchasing some substantially identical shares using a special ASX trading market.

When the dividend washing integrity rule applies, you are not entitled to claim the franking credits for the second dividend. However, if your interest in the second parcel of shares exceeds the interest in the first parcel, you may be entitled to claim a portion of the franking credits for the additional shares. For more information, see Dividend washing rule.

The dividend washing integrity rule does not apply if:

  • you are an individual, and
  • you received no more than $5,000 in franking credits during 2017–18.

However, the dividend washing integrity rule applies where dividends flow indirectly to you through your interest in a trust or partnership.

If you are claiming franking credits at this section, certain rules apply. Read Holding period rule and Related payment rule to check that you are entitled to claim the credits.

You must be a 'qualified person' to be entitled to a franking credit in respect of a dividend. To be a qualified person you must satisfy the holding period rule and the related payments rule.