Dividend access shares and dividend streaming
Business Succession Update – Spring 2013
Of the many issues facing the use of dividend access shares, one that many advisors struggle with is subdivision 204-D: dividend streaming.
The subdivision aims to prevent the streaming of franking credits to one member of a corporate tax entity in preference to another.
For the subdivision to apply, members to whom distributions are streamed must be in a position to derive a greater benefit from the franking credits than other members.
Streaming is not a defined term but the explanatory memorandum to the New Business Tax System (Imputation) Bill 2002 Chapter 3 para 28, describes streaming as selectively directing the flow of franked distributions to those members who can most benefit from imputation credits. Accordingly, on the basis that the only dividends declared are fully franked dividends, there will be no streaming. A difficult problem with an easy solution.