ATO Interpretative Decision

ATO ID 2002/602

Income Tax

The 45-day holding period rule - scrip for scrip takeover
FOI status: may be released

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Though Part IIIAA of the Income Tax Assessment Act 1936 ceased to have application from 1 July 2002, it is necessary to have regard to the rules in Division 1A of the former Part IIIAA in determining whether an entity is a qualified person for the purpose of the new rules contained in the Simplified Imputation System in respect of a franked distribution made directly or indirectly to the entity on or after 1 July 2002.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Does section 160APHO of the Income Tax Assessment Act 1936 (ITAA 1936) apply to imputation credits attached to dividends received by the taxpayer for shares acquired in a scrip for scrip takeover?

Decision

Yes, section 160APHO of the ITAA 1936 does apply to imputation credits attached to dividends received by the taxpayer for shares acquired in a scrip for scrip takeover.

Facts

The taxpayer purchased shares in a company prior to 1 July 1997. The company was taken over by another company after 1 July 1997. The shares held in the original company were ordinary shares. The takeover company issued ordinary shares, after 1 July 1997, to shareholders on a one-for-one basis to effect the takeover.

Reasons for Decision

Division 1A of Part IIIAA of the ITAA 1936 determines when a taxpayer will qualify for franking credits in respect of dividends derived. There is no specific provision within that Division that deems the acquisition date of shares in a scrip-for-scrip takeover to be the date of purchase of the original shares. The requirements of Section 160APHO of the ITAA 1936 will therefore apply to the imputation credits attached to dividends received for shares in the takeover company issued in place of the original shares.

Amendment History

Date of Amendment	Part	Comment
21 November 2014	After title	Inserted note regarding repealed section 160APHO of the ITAA 1936
	Related ATO Interpretative Decisions	Inserted related ATO IDs

Date of decision: 12 March 2002

Legislative References:
Income Tax Assessment Act 1936
section 160APHO

Related ATO Interpretative Decisions
ATO ID 2002/603
ATO ID 2002/64
ATO ID 2003/1105
ATO ID 2003/1108

Keywords
Scrip dividends
Imputation credits

Siebel/TDMS Reference Number: DW241404; 1-5BRZYJ6

Business Line: Private Groups and High Wealth Individuals

Date of publication: 31 May 2002

ISSN: 1445-2782

history

	Date:	Version:
	12 March 2002	Original statement
You are here	21 November 2014	Updated statement
	6 October 2017	Updated statement

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