ATO eyes dividend access share arrangements
The Australian Taxation Office (ATO) has warned taxpayers against individuals promoting dividend access share arrangements.
As part of the scheme, a private company issues a new class of shares to associates of the private company's ordinary shareholders for nominal consideration.
According to the ATO, the new shares carry no voting rights and only carry the opportunity to receive a dividend.
The accumulated profits of the private company are then distributed to the new entity, and they pay less tax than would have been the case if the dividends were paid to the original shareholders of the private company, the ATO stated.
"While some arrangements may be claimed to be done for commercial and other non-tax purposes, we will be closely examining whether the way these arrangements have been set up would show a tax avoidance purpose," said Tax Commissioner Michael D'Ascenzo.
General anti-avoidance provisions may apply to these arrangements, while individuals involved in the facilitation of such schemes may risk breaching promoter penalty laws, the ATO stated.
The ATO has urged taxpayers to seek independent advice and notify the office of any individual or entity promoting such share arrangements.
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