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Edited version of private advice
Authorisation Number: 1052261711240
Date of advice: 14 June 2024
Ruling
Subject: Return of capital and special dividends
In order to protect the privacy and commercial in-confidence components of this private binding ruling, the following summary is provided:
Question 1
On the assumption that the return of capital will not be a dividend for income tax purposes, will a franking debit arise in the franking account of the taxpayer under section 205-30 of the Income Tax Assessment Act 1997 (ITAA 1997) in respect of the return of capital?
Answer
No. On the basis that the return of capital will not be a dividend for income tax purposes, a franking debit will not arise in the franking account of the taxpayer under section 205-30 of the ITAA 1997 in respect of the return of capital.
Question 2
Will the special dividends be considered frankable distributions under subsection 202-40(1) of the ITAA 1997?
Answer
Yes. The special dividends will be considered frankable distributions under subsection 202-40(1) of the ITAA 1997.
Question 3
Will the Commissioner make a determination under paragraph 177EA(5)(a) of the Income Tax Assessment Act 1936 (ITAA 1936) that a franking debit arises in the taxpayer's franking account in respect of the special dividends?
Answer
No. The Commissioner will not make a determination under paragraph 177EA(5)(a) of the ITAA 1936 that a franking debit or exempting debit arises in the taxpayer's franking account in respect of the special dividends.
Question 4
Will the Commissioner make a determination pursuant to paragraph 204-30(3)(a) of the ITAA 1997 that a specified franking debit arises in the franking account of the taxpayer in respect of the special dividends?
Answer
No. The Commissioner will not make a determination under subsection 204-30(3)(a) of the ITAA 1997 that a specified franking debit arises in the franking account of the taxpayer in respect of the special dividends.