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Ruling
Subject: Section 177E of the Income Tax Assessment Act 1936
Question
Have you obtained a tax benefit in connection with a scheme to which section 177E of the Income Tax Assessment Act 1936 (ITAA 1936) applies in each of the Relevant Income Years (defined below)?
Answer:
No
This ruling applies for the following period (Relevant Income Years)
Year ended 30 June 2013
The scheme commenced on
1 July 2012
Relevant facts
The taxpayer has provided a set of facts and wishes to know whether Section 177E of the ITAA 1936 applies.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 177E
Reasons for decision
Part IVA of the ITAA 1936 is a general anti-avoidance provision that can apply in certain circumstances. Part IVA gives the Commissioner the power to cancel a 'tax benefit' (or part of a 'tax benefit') that has been obtained, or would, but for section 177F of the ITAA 1936, be obtained, by a taxpayer in connection with a scheme to which Part IVA applies.
Part IVA of the ITAA 1936 contains a provision (section 177E) which is specifically directed at "dividend stripping" schemes.
The preconditions for the operation of section 177E of the ITAA 1936 are set out in paragraphs (a) to (d). Where these conditions are satisfied, the scheme is to be taken to be a scheme to which Pt IVA applies.
In your case, when considered in conjunction with the factors in section 177E(1) of the ITAA 1936, all these factors either point against the application of Part IVA or are neutral. Therefore, Part IVA will not apply to this arrangement.