Private ruling: Dividend paid to you after transfer of shares off-market to your superannuation fund
Published: September 2011

Ruling: Q1: Where: · an off-market transfer of a listed security from a member of a superannuation fund to the superannuation fund as an in-specie contribution by the member was completed after the 'record date' for dividend payable to holders of the listed security; and · the member subsequently received the dividend to which the 'record date' related, · can the member treat the dividend received as a dividend received by the superannuation fund? Advice/Answer No This ABA applies for the following period 1 July 2011 to 30 June 2012

Relevant facts and circumstances: This advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice. An off-market transfer form (the Form) to sell a certain number of shares held by you in a publicly listed company to your self managed superannuation fund (the Fund) was completed: · by you in your individual capacity as the seller; and · by you and another individual as the trustees of the Fund. The completed Form was sent to the share registry concerned for processing. The share registry advised you that the shares could not be transferred as you needed to provide certain seller identification document. By the time you received the share registry's advice and provided the document needed for processing the share transfer, it had already passed the 'record date' for the 2011 interim dividend payable to shareholders. Consequently, you received the dividend as the owner. The administrator of the Fund advised you that as the transfer form was completed in a registrable format, the Fund is the rightful owner of the dividends according to Taxation Ruling TR 2010/1 (TR 2010/1).

Relevant legislative provisions: Income Tax Assessment Act 1936 Section 44 | Income Tax Assessment Act 1997 Section 207-20 | Income Tax Assessment Act 1997 Section 285-5 | Income Tax Assessment Act 1997 Subsection 285-5(1)

Reasons for decision: Summary: The dividend you received cannot be treated as a dividend received by the Fund as the transfer of shares from you to the Fund was not completed before the 'ex dividend date'. | Detailed Reasoning - Detailed reasoning: The following was noted from the website of Australian Securities Exchange (ASX) | Detailed Reasoning - Record date: The Record date is 5:00 pm on the date a company closes its share register to determine which shareholders are entitled to receive the current dividend. It is the date where all changes to registration details must be finalised. | Detailed Reasoning - Ex dividend date: The Ex dividend date occurs four business days before the company's Record Date. To be entitled to a dividend a shareholder must have purchased the shares before the ex dividend date. If you purchase shares on or after that date, the previous owner of the shares (and not you) is entitled to the dividend. According to the ASX information quoted above: (a) if a shareholder purchased shares before the 'ex dividend date', the shareholder is entitled to a dividend; (b) if a shareholder purchased shares on or after the 'ex dividend date', the previous owner of the shares (and not the shareholder) is entitled to the dividend; and (c) all changes to registration details of a share or shares must be finalised by the 'record date' to enable a company to determine which shareholders are entitled to receive the current dividend. As you completed the Form on (but not before) the 'ex dividend date' for the publicly listed company's 2011 interim dividend, you as the previous owner (and not the Fund) was entitled to the dividend according to ASX's rule. This would still be the case even if the share registry had been able to process the transfer form immediately, because the date of completion was not before the 'ex-dividend date'. As this is the established market practice for transfer of shares and payment of dividends, the Commissioner will not over-ride it TR 2010/1 deals basically with when contribution is considered to be made to a superannuation fund. In regard to transfer of ownership, paragraphs 22 and 24 state that: 22. For a class of property, the legal ownership of which is evidenced by a system of formal registration (for example shares in a publicly listed company or Torrens System land), legal ownership will pass when the superannuation provider is registered as the owner. However, beneficial ownership may be transferred earlier. 24. A superannuation provider acquires the beneficial ownership of shares or units in an Australian Stock Exchange listed company or unit trust when the provider obtains a properly executed off-market share transfer in registrable form. TR 2010/1 further provides the following example to illustrate the point: Example 7 - when in-specie contribution of shares is made 85. On 26 June 2009, Cheung signs an off-market share transfer form to effect a contribution of shares from herself to Cho Pty Ltd, the trustee of her self-managed superannuation fund. However, Cheung leaves certain parts of the form blank for completion by her stock broker, as her shareholdings, and those of Cho Pty Ltd, are broker-sponsored. Cheung posts the transfer form to her broker on the same day. 86. Cheung's broker adds the omitted information on 2 July 2009 and completes the transfer through CHESS. Cho Pty ltd is registered as a shareholder on 5 July 2009. 87. Cheung's contribution will be made on 2 July 2009 as it is until that day that the relevant transfer has been completed to registrable form. As the share registry was unable to process the Form you sent to them because the required security validation documents were not attached, the Form was not in registrable form, and therefore no legal or beneficial ownership has been acquired by the Fund. In the circumstances, TR 2010/1 does not assist your case.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.