Class Ruling CR 2007/53
Date of effect: 1 July 2006

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provision(s) 2. The relevant provisions dealt with in this Ruling are: Class of entities 3. The class of entities to which this Ruling applies are the holders of ordinary shares in Veda Advantage Limited (Veda), an Australian resident company listed on the Australian Stock Exchange (ASX) and the New Zealand Exchange (NZX), who receive the proposed special dividend in conjunction with the disposal of their shares in Veda to VA Australia Finance Pty Ltd (VA Finance) pursuant to the Arrangement described in the Scheme part of this Ruling. Qualifications 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 13 to 23 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are the holders of ordinary shares in Veda Advantage Limited (Veda), an Australian resident company listed on the Australian Stock Exchange (ASX) and the New Zealand Exchange (NZX), who receive the proposed special dividend in conjunction with the disposal of their shares in Veda to VA Australia Finance Pty Ltd (VA Finance) pursuant to the Arrangement described in the Scheme part of this Ruling. | Qualifications: 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 13 to 23 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: 8. This Ruling applies from 1 July 2006 to 30 June 2008. However, the Ruling continues to apply after this date to all entities within the specified class who entered into the specified scheme during the term of the Ruling, subject to there being no change in the scheme or in the entities involved in the scheme. 9. The Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling. Furthermore, the Ruling only applies to the extent that: 10. If this Ruling is inconsistent with a later public or private ruling, the relevant class of entities may rely on either ruling which applies to them (item 1 of subsection 357-75(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA)). 11. If this Ruling is inconsistent with an earlier private ruling, the private ruling is taken not to have been made if, when the Ruling is made, the following two conditions are met: 12. If the above two conditions do not apply, the relevant class of entities may rely on either ruling which applies to them (item 3 of subsection 357-75(1) of Schedule 1 to the TAA). 13. The scheme that is the subject of this Ruling is described below. This description of the scheme is based on information provided by the applicant. The following documents or relevant parts of them form part of and are to be read with the description. Note : certain information from PWC has been provided on a commercial-in-confidence basis and will not be disclosed or released under the Freedom of Information Legislation. 14. Veda is an Australian incorporated company listed on the ASX and NZX. Veda is the head company of the Veda Advantage Tax Consolidated Group. 15. Veda has 224,686,646 shares on issue as at 4 May 2007. 16. The existing shareholders of Veda are a mix of individuals, companies and superannuation funds, approximately 25% of which are non-residents. 17. On 2 April 2007, Veda made a simultaneous announcement on the ASX and NZX that it had received a proposal from a private equity consortium that would pursue a transaction for the acquisition of Veda. The transaction, if implemented, would result in the consortium, through a corporate vehicle (VA Finance), owning all the shares in Veda, effectively privatising the company. 18. The proposed transaction will be implemented by way of a Scheme of Arrangement under the Corporations Act 2001 . 19. The total consideration that an existing Veda shareholder will receive pursuant to the proposed transaction is $3.61 per share. 20. As part of the proposed transaction, Veda may pay a fully franked special dividend of 10 cents per share to all shareholders just prior to the implementation of the Scheme of Arrangement. 21. Veda advises that trading in Veda shares will be suspended on the ASX and NZX at the close of trading on 25 June 2007 if the transaction proceeds. 22. Veda will determine who participates in the proposed Scheme of Arrangement on the Scheme Record Date of 2 July 2007. A Scheme Participant is a Veda shareholder who is registered as a holder of a Veda share in the Share Register at 5pm on 2 July 2007. It is an identified Scheme Participant who is eligible to receive any entitlements to the Scheme Consideration. 23. The Veda shares will be transferred to VA Finance on the Implementation Date of the Scheme of Arrangement (9 July 2007), and if the special dividend is paid by Veda beforehand, the $3.61 Scheme Consideration would be reduced (on a 1 cent for 1 cent basis) for any special dividend paid. | Franking of dividend: 24. Where Veda franks a special dividend in accordance with section 202-5 of the ITAA 1997, the special dividend will be a franked distribution. | Qualified persons: 25. The payment of the proposed special dividend as part of the Scheme of Arrangement will constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 26. Veda shareholders will not be able to satisfy holding their Veda shares 'at risk' for the purposes of Division 1A of former Part IIIAA of the ITAA 1936 (former Division 1A) as of the Scheme Record Date of 2 July 2007. Those Veda shareholders who have held their Veda shares 'at risk' for more than 45 days during the period 12 May 2007 to 1 July 2007 will be qualified persons with respect to the proposed fully franked special dividend. | The anti-avoidance provisions: 27. The Commissioner will not make a determination under paragraph 177EA(5)(a) or (b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefit received in relation to the special dividend received by Veda shareholders. 28. The Commissioner will not make a determination under paragraph 204-30(3)(c) of the ITAA 1997 to deny the whole, or any part, of the imputation benefits received in relation to the special dividend received by Veda shareholders. Commissioner of Taxation 13 June 2007 | Franking of dividend: 29. The proposed dividend is a distribution made by Veda to its shareholders and is debited against its retained earnings account. Therefore, the dividend constitutes a frankable distribution for the purposes of subsection 202-40(1) of the ITAA 1997, and is capable of being franked in accordance with section 202-5 of the ITAA 1997. | Qualified persons: 30. Former Division 1A of the ITAA 1936 contains the measures known as the holding period rule and the related payment rule. In broad terms, former Division 1A of the ITAA 1936 provides the statutory tests that must be satisfied for a taxpayer to be a 'qualified person' with respect to a franked distribution they have received and thus be entitled to a tax offset for the franking credit attached to the distribution 31. The test of what constitutes a 'qualified person' is provided in former section 160APHO of the ITAA 1936. Broadly speaking, to be a qualified person in relation to a dividend, a taxpayer must satisfy either the holding period rule or the related payment rule. 32. Former subsection 160APHO(1) of the ITAA 1936 states: 33. If a taxpayer is not under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the primary qualification period. If a taxpayer is under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the secondary qualification period. 34. In order to determine which is the relevant qualification period, it is necessary to determine whether, under the present arrangement, the current shareholders of Veda are considered to be under an obligation to make a related payment. Former section 160APHN of the ITAA 1936 provides non-definitive examples of what constitutes the making of a related payment for the purposes of former Division 1A of the ITAA 1936. Former subsection 160APHN(2) of the ITAA 1936 provides as follows: 35. Former subsection 160APHN(3) of the ITAA 1936 states: 36. Former subsection 160APHN(4) of the ITAA 1936 states: 37. In the current circumstances, an integral part of the arrangement is the planned payment of the special dividend of 10 cents per share. Further, it is clearly contemplated in the current arrangement that the total consideration to be paid by VA Finance is to be reduced by an amount equal to the amount of any special dividend paid. This reduction is specifically calculated by reference to the amount of any special dividend paid. In essence, VA Finance would pay $3.51 per share instead of $3.61 per share if the 10c per share special dividend is paid. Likewise, Veda shareholders would receive $3.51 from VA Finance from the disposal of their shares if a 10c per share special dividend is paid as against the total consideration of $3.61 to be provided pursuant to the Scheme of Arrangement. 38. As the Scheme of Arrangement clearly contemplates the reduction in the consideration for the disposal of a Veda share to be calculated by reference to the value of any special dividend paid pursuant to the Scheme of Arrangement, the reduction in the consideration is considered to constitute a notional crediting passing on the benefit of the proposed special dividend from a Veda shareholder to VA Finance. As such, it is considered to constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 39. As the Veda shareholders are taken, for the purposes of former Division 1A of the ITAA 1936, to be under an obligation to make a related payment in respect of the special dividend, the relevant holding period is thus the secondary qualification period pursuant to former paragraph 160APHO(1)(b) of the ITAA 1936. 40. The secondary qualification period is defined in former section 160APHD of the ITAA 1936 as follows: 41. The concept of 'ex dividend' is defined by former subsection 160APHE(1) of the ITAA 1936 as follows: 42. Pursuant to the Scheme of Arrangement, trading in Veda shares will be suspended on the next business day after the second court hearing. The date of the second court hearing is 22 June 2007. Thus, Veda shares will be suspended from trading on 25 June 2007. This is the last day on which a person can acquire a Veda share and have an entitlement to the proposed special dividend. Accordingly, the ex dividend date is 26 June 2007. 43. The secondary qualification period thus runs from 45 days before the 26 June 2007 as determined above and ends 45 days after that day. In practical terms, this means that the secondary qualification period runs from 12 May 2007 to 10 August 2007. However, pursuant to former subsection 160APHO(3), any days on which a taxpayer has materially diminished risks of loss or opportunities for gain in respect of the Veda shares are to be excluded. This would mean that the secondary qualification period would run from 12 May 2007 until the date that Veda shareholders are no longer at risk for the purposes of former Division 1A of the ITAA 1936. 44. In this context, the participants in the Scheme of Arrangement are determined on the Scheme Record Date of 2 July 2007 on the basis of being a Veda shareholder who is registered in the register as the holder of the relevant Scheme Share at 5pm on 2 July 2007. It is considered that once a Veda shareholder is identified as a Scheme Participant, they would no longer be considered to hold their shares at risk for the purposes of former Division 1A of the ITAA 1936, as at that time VA Finance is committed to passing on the Scheme Consideration to the identified Scheme Participants pursuant to the Scheme of Arrangement. 45. Accordingly, the secondary qualification period would run from 12 May 2007 until 2 July 2007. Veda shareholders who receive the proposed special dividend would need to hold their shares at risk for 45 days during this period in order to be a 'qualified person' for the purposes of former Division 1A of the ITAA 1936. Further, pursuant to former paragraph 160APHO(2)(a) of the ITAA 1936, the date of acquisition or disposal are not included in the relevant 45 day period. This would have the effect in the present circumstances, for example, that the 45 day qualification period could not include 12 May 2007 if this was the date of acquisition of Veda shares or 2 July 2007 as this is considered to be the date of disposal of Veda shares. | Section 177EA: 46. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes to obtain a tax advantage in relation to imputation benefits. In essence, it applies to schemes for the disposition of shares or an interest in shares, where a franked distribution is paid or payable in respect of the shares or an interest in shares. 47. Specifically, subsection 177EA(3) of the ITAA 1936 provides that section 177EA applies if: 48. If section 177EA applies the Commissioner may make a determination under subsection 177EA(5) that either a franking debit arises to the company in respect of each dividend paid to the relevant taxpayer or, in the alternative, that no franking credit benefit arises in respect of a dividend paid to the relevant taxpayer. 49. Veda is a corporate tax entity. The sale of the ordinary shares in Veda pursuant to a Scheme of Arrangement is a scheme for the disposition of membership interests. 50. In the present case, it is considered that the conditions of paragraphs 177EA(3)(a) to (d) are satisfied. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme (as provided for in subsection 177EA(17)), it would be concluded that, on the part of Veda, its shareholders or any other relevant party, there is a purpose, more than merely an incidental purpose, of conferring a franking credit benefit under the scheme. 51. In arriving at a conclusion one must have regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17). The relevant circumstances listed there encompass a range of diverse matters which taken individually or in conjunction with other matters, listed or not, could indicate the requisite purpose, that is, that the delivery of the franking credit benefit is more than an incidental purpose of the scheme. 52. The relevant circumstances are that the disposition of the ordinary shares in Veda is made pursuant to a takeover offer made by a consortium. The takeover of Veda by way of a Scheme of Arrangement is one of the alternatives available under the Corporations Act 2001 to be voted upon by Veda's existing shareholders. This particular Scheme of Arrangement is an ordinary commercial transaction. There is no intention evidenced in the scheme that the payment of the proposed special dividend is to enable a particular shareholder or class of shareholders (current and future) to obtain imputation benefits. 53. Having regard to the relevant circumstances of the scheme, it cannot be concluded that Veda or the shareholders entered into or carried out the scheme for the purpose of enabling the shareholders to obtain a franking credit benefit. | Section 204-30: 54. Section 204-30 of the ITAA 1997 applies where a corporate tax entity streams the payment of dividends, or the payment of dividends and the giving of other benefits, to its members in such a way that: 55. If section 204-30 of the ITAA 1997 applies the Commissioner has a discretion under subsection 204-30(3) to make a determination in writing: 56. For section 204-30 of the ITAA 1997 to apply, members to whom distributions are streamed must derive a greater benefit from imputation benefits than other members. The words 'derives a greater benefit from franking credits' (imputation benefits) are defined in subsection 204-30(8) by reference to the ability of the members to fully utilise imputation benefits. 57. Under the current proposal for the payment of a special dividend, all Veda shareholders will receive an imputation benefit as a result of the special dividend; the resident shareholder in the form of a tax offset (paragraph 204-30(6)(a) of the ITAA 1997) and the non-resident shareholders in the form of an exemption from dividend withholding tax (paragraph 204-30(6)(e) of the ITAA 1997). The resident members will derive a greater benefit from franking credits than the non-resident members. However, as the entire special dividend is to be fully franked and paid to all the shareholders, it cannot be argued that Veda has directed the flow of distributions in such a manner as to ensure that imputation benefits are derived by members who derive greater benefit from franking credits, while other members receive lesser or no imputation benefits. 58. Having regard to all of the relevant circumstances it is considered that section 204-30 of the ITAA 1997 does not apply. 59. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: Franking of dividend: 24. Where Veda franks a special dividend in accordance with section 202-5 of the ITAA 1997, the special dividend will be a franked distribution. | Qualified persons: 25. The payment of the proposed special dividend as part of the Scheme of Arrangement will constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 26. Veda shareholders will not be able to satisfy holding their Veda shares 'at risk' for the purposes of Division 1A of former Part IIIAA of the ITAA 1936 (former Division 1A) as of the Scheme Record Date of 2 July 2007. Those Veda shareholders who have held their Veda shares 'at risk' for more than 45 days during the period 12 May 2007 to 1 July 2007 will be qualified persons with respect to the proposed fully franked special dividend. | The anti-avoidance provisions: 27. The Commissioner will not make a determination under paragraph 177EA(5)(a) or (b) of the ITAA 1936 to deny the whole, or any part, of the imputation benefit received in relation to the special dividend received by Veda shareholders. 28. The Commissioner will not make a determination under paragraph 204-30(3)(c) of the ITAA 1997 to deny the whole, or any part, of the imputation benefits received in relation to the special dividend received by Veda shareholders. Commissioner of Taxation 13 June 2007


Appendix: Franking of dividend: 29. The proposed dividend is a distribution made by Veda to its shareholders and is debited against its retained earnings account. Therefore, the dividend constitutes a frankable distribution for the purposes of subsection 202-40(1) of the ITAA 1997, and is capable of being franked in accordance with section 202-5 of the ITAA 1997. | Qualified persons: 30. Former Division 1A of the ITAA 1936 contains the measures known as the holding period rule and the related payment rule. In broad terms, former Division 1A of the ITAA 1936 provides the statutory tests that must be satisfied for a taxpayer to be a 'qualified person' with respect to a franked distribution they have received and thus be entitled to a tax offset for the franking credit attached to the distribution 31. The test of what constitutes a 'qualified person' is provided in former section 160APHO of the ITAA 1936. Broadly speaking, to be a qualified person in relation to a dividend, a taxpayer must satisfy either the holding period rule or the related payment rule. 32. Former subsection 160APHO(1) of the ITAA 1936 states: 33. If a taxpayer is not under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the primary qualification period. If a taxpayer is under an obligation to make a related payment in relation to a dividend or distribution, the taxpayer will have to satisfy the holding period requirement within the secondary qualification period. 34. In order to determine which is the relevant qualification period, it is necessary to determine whether, under the present arrangement, the current shareholders of Veda are considered to be under an obligation to make a related payment. Former section 160APHN of the ITAA 1936 provides non-definitive examples of what constitutes the making of a related payment for the purposes of former Division 1A of the ITAA 1936. Former subsection 160APHN(2) of the ITAA 1936 provides as follows: 35. Former subsection 160APHN(3) of the ITAA 1936 states: 36. Former subsection 160APHN(4) of the ITAA 1936 states: 37. In the current circumstances, an integral part of the arrangement is the planned payment of the special dividend of 10 cents per share. Further, it is clearly contemplated in the current arrangement that the total consideration to be paid by VA Finance is to be reduced by an amount equal to the amount of any special dividend paid. This reduction is specifically calculated by reference to the amount of any special dividend paid. In essence, VA Finance would pay $3.51 per share instead of $3.61 per share if the 10c per share special dividend is paid. Likewise, Veda shareholders would receive $3.51 from VA Finance from the disposal of their shares if a 10c per share special dividend is paid as against the total consideration of $3.61 to be provided pursuant to the Scheme of Arrangement. 38. As the Scheme of Arrangement clearly contemplates the reduction in the consideration for the disposal of a Veda share to be calculated by reference to the value of any special dividend paid pursuant to the Scheme of Arrangement, the reduction in the consideration is considered to constitute a notional crediting passing on the benefit of the proposed special dividend from a Veda shareholder to VA Finance. As such, it is considered to constitute a related payment for the purposes of former section 160APHN of the ITAA 1936. 39. As the Veda shareholders are taken, for the purposes of former Division 1A of the ITAA 1936, to be under an obligation to make a related payment in respect of the special dividend, the relevant holding period is thus the secondary qualification period pursuant to former paragraph 160APHO(1)(b) of the ITAA 1936. 40. The secondary qualification period is defined in former section 160APHD of the ITAA 1936 as follows: 41. The concept of 'ex dividend' is defined by former subsection 160APHE(1) of the ITAA 1936 as follows: 42. Pursuant to the Scheme of Arrangement, trading in Veda shares will be suspended on the next business day after the second court hearing. The date of the second court hearing is 22 June 2007. Thus, Veda shares will be suspended from trading on 25 June 2007. This is the last day on which a person can acquire a Veda share and have an entitlement to the proposed special dividend. Accordingly, the ex dividend date is 26 June 2007. 43. The secondary qualification period thus runs from 45 days before the 26 June 2007 as determined above and ends 45 days after that day. In practical terms, this means that the secondary qualification period runs from 12 May 2007 to 10 August 2007. However, pursuant to former subsection 160APHO(3), any days on which a taxpayer has materially diminished risks of loss or opportunities for gain in respect of the Veda shares are to be excluded. This would mean that the secondary qualification period would run from 12 May 2007 until the date that Veda shareholders are no longer at risk for the purposes of former Division 1A of the ITAA 1936. 44. In this context, the participants in the Scheme of Arrangement are determined on the Scheme Record Date of 2 July 2007 on the basis of being a Veda shareholder who is registered in the register as the holder of the relevant Scheme Share at 5pm on 2 July 2007. It is considered that once a Veda shareholder is identified as a Scheme Participant, they would no longer be considered to hold their shares at risk for the purposes of former Division 1A of the ITAA 1936, as at that time VA Finance is committed to passing on the Scheme Consideration to the identified Scheme Participants pursuant to the Scheme of Arrangement. 45. Accordingly, the secondary qualification period would run from 12 May 2007 until 2 July 2007. Veda shareholders who receive the proposed special dividend would need to hold their shares at risk for 45 days during this period in order to be a 'qualified person' for the purposes of former Division 1A of the ITAA 1936. Further, pursuant to former paragraph 160APHO(2)(a) of the ITAA 1936, the date of acquisition or disposal are not included in the relevant 45 day period. This would have the effect in the present circumstances, for example, that the 45 day qualification period could not include 12 May 2007 if this was the date of acquisition of Veda shares or 2 July 2007 as this is considered to be the date of disposal of Veda shares. | Section 177EA: 46. Section 177EA of the ITAA 1936 is a general anti-avoidance provision that applies to a wide range of schemes to obtain a tax advantage in relation to imputation benefits. In essence, it applies to schemes for the disposition of shares or an interest in shares, where a franked distribution is paid or payable in respect of the shares or an interest in shares. 47. Specifically, subsection 177EA(3) of the ITAA 1936 provides that section 177EA applies if: 48. If section 177EA applies the Commissioner may make a determination under subsection 177EA(5) that either a franking debit arises to the company in respect of each dividend paid to the relevant taxpayer or, in the alternative, that no franking credit benefit arises in respect of a dividend paid to the relevant taxpayer. 49. Veda is a corporate tax entity. The sale of the ordinary shares in Veda pursuant to a Scheme of Arrangement is a scheme for the disposition of membership interests. 50. In the present case, it is considered that the conditions of paragraphs 177EA(3)(a) to (d) are satisfied. Accordingly, the issue is whether, having regard to the relevant circumstances of the scheme (as provided for in subsection 177EA(17)), it would be concluded that, on the part of Veda, its shareholders or any other relevant party, there is a purpose, more than merely an incidental purpose, of conferring a franking credit benefit under the scheme. 51. In arriving at a conclusion one must have regard to the relevant circumstances of the scheme which include, but are not limited to, the circumstances set out in subsection 177EA(17). The relevant circumstances listed there encompass a range of diverse matters which taken individually or in conjunction with other matters, listed or not, could indicate the requisite purpose, that is, that the delivery of the franking credit benefit is more than an incidental purpose of the scheme. 52. The relevant circumstances are that the disposition of the ordinary shares in Veda is made pursuant to a takeover offer made by a consortium. The takeover of Veda by way of a Scheme of Arrangement is one of the alternatives available under the Corporations Act 2001 to be voted upon by Veda's existing shareholders. This particular Scheme of Arrangement is an ordinary commercial transaction. There is no intention evidenced in the scheme that the payment of the proposed special dividend is to enable a particular shareholder or class of shareholders (current and future) to obtain imputation benefits. 53. Having regard to the relevant circumstances of the scheme, it cannot be concluded that Veda or the shareholders entered into or carried out the scheme for the purpose of enabling the shareholders to obtain a franking credit benefit. | Section 204-30: 54. Section 204-30 of the ITAA 1997 applies where a corporate tax entity streams the payment of dividends, or the payment of dividends and the giving of other benefits, to its members in such a way that: 55. If section 204-30 of the ITAA 1997 applies the Commissioner has a discretion under subsection 204-30(3) to make a determination in writing: 56. For section 204-30 of the ITAA 1997 to apply, members to whom distributions are streamed must derive a greater benefit from imputation benefits than other members. The words 'derives a greater benefit from franking credits' (imputation benefits) are defined in subsection 204-30(8) by reference to the ability of the members to fully utilise imputation benefits. 57. Under the current proposal for the payment of a special dividend, all Veda shareholders will receive an imputation benefit as a result of the special dividend; the resident shareholder in the form of a tax offset (paragraph 204-30(6)(a) of the ITAA 1997) and the non-resident shareholders in the form of an exemption from dividend withholding tax (paragraph 204-30(6)(e) of the ITAA 1997). The resident members will derive a greater benefit from franking credits than the non-resident members. However, as the entire special dividend is to be fully franked and paid to all the shareholders, it cannot be argued that Veda has directed the flow of distributions in such a manner as to ensure that imputation benefits are derived by members who derive greater benefit from franking credits, while other members receive lesser or no imputation benefits. 58. Having regard to all of the relevant circumstances it is considered that section 204-30 of the ITAA 1997 does not apply.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | [Note: This is a consolidated version of this document. Refer to the Tax Office Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.] | The taxpayer or associate is taken, for the purposes of this Division, to have made, to be under an obligation to make, or to be likely to make, a related payment in respect of the dividend or distribution if, under an arrangement, the taxpayer or associate has done, is under an obligation to do, or may reasonably be expected to do, as the case may be, anything having the effect of passing the benefit of the dividend or distribution to one or more other persons. | a share in respect of which a dividend is to be paid, or an interest (other than an interest as a beneficiary of a widely held trust) in such a share, becomes ex dividend on the day after the last day on which the acquisition by a person of the share will entitle the person to receive the dividend. | Appendix 2 - Detailed contents list


Legislative references: ITAA 1936 Pt IIIAA Div 1A ITAA 1936 160APHD ITAA 1936 160APHE(1) ITAA 1936 160APHN ITAA 1936 160APHN(2) ITAA 1936 160APHN(3) ITAA 1936 160APHN(4) ITAA 1936 160APHO ITAA 1936 160APHO(1) ITAA 1936 160APHO(1)(b) ITAA 1936 160APHO(2)(a) ITAA 1936 160APHO(3) ITAA 1936 177EA ITAA 1936 177EA(3) ITAA 1936 177EA(3)(a) ITAA 1936 177EA(5) ITAA 1936 177EA(5)(a) ITAA 1936 177EA(5)(b) ITAA 1936 177EA(17) ITAA 1997 202-5 ITAA 1997 202-40(1) ITAA 1997 204-30 ITAA 1997 204-30(1)(a) ITAA 1997 204-30(1)(b) ITAA 1997 204-30(1)(c) ITAA 1997 204-30(3) ITAA 1997 204-30(3)(a) ITAA 1997 204-30(3)(c) ITAA 1997 204-30(6)(a) ITAA 1997 204-30(6)(e) ITAA 1997 204-30(8) TAA 1953 TAA 1953 Sch 1 357-75(1) Copyright Act 1968 Corporations Act 2001
Subject references: deemed dividends dividend income dividend streaming arrangements frankable dividends imputation system franking credits