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Edited version of your written advice
Authorisation Number: 1051516907373
Date of advice: 13 May 2019
Subject: Disposal of preference shares
Question 1
Are the Dividends included in Company A’s assessable income under section 44 of the Income Tax Assessment Act 1936 (ITAA 1936)?
Answer
Yes
Question 2
Are the franking credits attached to the Dividends included in Company A’s assessable income (and is Company A entitled to a corresponding tax offset) pursuant to section 207-20 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
Question 3
For the purposes of calculating the gain or loss on the sale of its Preference Shares under section 6-5 or section 8-1 of the ITAA 1997, do the proceeds received by Company from the sale of its Preference Shares include the Discretionary Dividend received by Company A?
Answer
No
Question 4
For the purposes of calculating the gain or loss on the sale of its Preference Shares under section 6-5 or section 8-1 of the ITAA 1997, do the proceeds received by Company A from the sale of its Preference Shares include the Ordinary Dividend received by Company A?
Answer
No
Question 5
Does paragraph 207-145(1)(a) of the ITAA 1997 apply to Company A in respect of the Dividends?
Answer
No
Question 6
Does section 177E of the ITAA 1936 apply to allow the Commissioner to make a determination under section 177F of the ITAA 1936 to include an amount in Company A’s assessable income in respect of the Dividends?
Answer
No
Question 7
Does paragraph 207-145(1)(d) of the ITAA 1997 apply to Company A in respect of the Dividends?
Answer
No
Question 8
Does section 204-30 of the ITAA 1997 apply to allow the Commissioner to make a determination under paragraph 204-30(3)(c) of the ITAA 1997 denying imputation benefits to Company A in respect of the Discretionary Dividend?
Answer
No
Question 9
Does section 204-30 of the ITAA 1997 apply to allow the Commissioner to make a determination under paragraph 204-30(3)(c) of the ITAA 1997 denying imputation benefits to Company A in respect of the Ordinary Dividend?
Answer
No
Question 10
Does section 177EA of the ITAA 1936 apply to allow the Commissioner to make a determination under paragraph 177EA(5)(b) of the ITAA 1936 denying imputation benefits to Company A in respect of the Discretionary Dividend?
Answer
No
Question 11
Does section 177EA of the ITAA 1936 apply to allow the Commissioner to make a determination under paragraph 177EA(5)(b) of the ITAA 1936 denying imputation benefits to Company A in respect of the Ordinary Dividend?
Answer
No
Relevant facts and circumstances
Company A applied for a private ruling in respect of the disposal of its Preference Shares in a company. Prior to entering into the contract for sale, the company declared a Discretionary Dividend and an Ordinary Dividend.