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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012701180450

Ruling

Subject: Proposed payment of a franked dividend

Questions at issue

In order to protect the privacy and commercial in-confidence components of the private binding ruling the following summary is provided.

Question 1

Is 'equity account X' a share capital account for the purposes of subsection 975-300(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Question 2

Is a distribution made to shareholders out of amounts transferred from 'equity account X' to retained earnings a dividend under subsection 6(1) of the Income Tax Assessment Act 1936 (ITAA 1936) paid out of profits derived by the company for the purposes of section 44 of the ITAA 1936?

Question 3

Is a distribution made to shareholders out of amounts transferred from 'equity account X' to retained earnings a frankable distribution for the purposes of subsection 202-40(1) of the ITAA 1997?

The Commissioner has ruled

Answer 1

No

Answer 2

Yes

Answer 3

Yes

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