Warning on franked distributions funded by raising capital
TA 2015/2 Franked distributions funded by raising capital to release franking credits to shareholders.
This Taxpayer Alert outlines the Commissioner’s concern when a company which has a significant franking credit balance raises new capital from new or existing shareholders and within a short time frame the company pays franked distributions to its shareholders which may be of a similar amount to the capital that has just been raised.
The concern is that this arrangement would be used by companies for purposes which include the releasing of franking credits or streaming dividends to shareholders. If this is the case, anti-avoidance rules could potentially apply.
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