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Edited version of private ruling
Authorisation Number: 1011832718398
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Ruling
Subject: Assessable income
Question
Do dividends or other distributions received from holding shares or securities which are the trading stock of a business activity constitute assessable income of that business activity for the purposes of Division 35 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer: Yes.
This ruling applies for the following periods
Year ending 30 June 2011
Year ending 30 June 2012
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
The scheme commenced on
1 July 2010
Relevant facts
You conduct a business of trading in securities (shares and options).
You implement a range of trading and hedging strategies.
Generally, shares and securities which you hold as trading stock are purchased and sold within a 12 month period, although not necessarily within the same tax year.
As part of your trading strategies, you trade in shares both with and without an entitlement to dividends and can receive dividends on shares held as trading stock of your business activity.
You also hold some shares as long term investments which are not included in your trading stock.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Division 35
Reasons for decision
Dividends and other distributions received in relation to shares and securities held as trading stock of a share trading business are received as a direct result of holding the trading stock and would not be considered a separate business activity.
Therefore, the assessable income of a business activity of share trading would include dividends and other distributions received from shares and securities held as trading stock of the business for the purposes of Division 35 of the ITAA 1997.