The Australian Taxation Office (ATO) has announced it is entering its next phase of chasing up hundreds of taxpayers who may have entered into a dividend washing transaction.
The ATO said it sent letters to 500 taxpayers who did not respond to the initial letters, and up to 1,500 other taxpayers who its latest data analysis shows may have entered into the transaction.
The ATO is asking these taxpayers to self-modify their tax returns so that they undo franking benefits they may have received from dividend washing transactions.
The ATO issued a public ruling in May this year that made it clear once and for all that such practices are definitely covered by the terms of its anti-avoidance legislation.
It said getting two sets of franking credits on what is one parcel of shares is not allowed.
The ATO said it will not penalise taxpayers who have gone into dividend washing transactions but self-modify their tax returns before the deadline date specified in their letters.
Furthermore, those tax payers who do not receive letters will also escape penalties if they amend their tax returns by 22 September.
"Taxpayers who are unsure about their own circumstances should seek independent
advice or apply for a private ruling from the ATO," the ATO said.
After issuing the first round of letters in March, about 1,300 taxpayers came forward to make changes voluntarily to remove franking benefits from their tax returns.
