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Edited version of private ruling
Authorisation Number: 1011498936130
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Ruling
Subject: Franking credits and the 45 day rule
Can the Commissioner exercise a discretion allowing you to utilise franking credits where you did not satisfy the 45-day holding rule due to selling shares by mistake?
No. The taxation law does not contain a discretion with respect to franking credits.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a company. You declared fully franked dividend income and the associated franking credits in your income tax return. You advised you did not hold the shares for 45 days because you were not aware the shares had gone ex-dividend before you sold them. You later repurchased the shares.
Relevant legislative provisions
Income Tax Assessment Act 1997 Paragraph 207-145(1)(a)
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Paragraph 207-145(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) states if an entity to whom a franked distribution is made is not a qualified person in relation to the distribution for the purposes of Division 1A of former Part IIIAA of the Income Tax Assessment Act 1936, they are not entitled to gross up their income for the franking credit received nor claim a tax offset equal to the franking credit.
To be a qualified person in relation to a dividend, the relevant entity must hold the relevant shares or interest at risk for the relevant qualification period of 45 days or 90 days for preference shares.
The taxation legislation does not contain any provisions that grants the Commissioner of Taxation a discretion to depart from the requirements of paragraph 207-145(1)(a) of the ITAA 1997.
It follows you are unable to include the relevant franking credits in your income tax assessment.