45 day rule

[white_goodman]

whats the go with this and collecting dividends... from my understandingyou have to own the share before it goes ex-dividend and hold it for a total of 45 days to avoid being taxed or something on your dividends u receive?

 

[Hyperion]

You need to hold for 45 days 'at risk' (net delta of at least 0.3) to be eligible to claim the franking credits.

There is an exemption if you have less than $5k in franking credits in a year. i.e. you can claim all the franking credits.

 

[andy87]

yeh also get 'less than 45 day holding tax' if you sell any stock before the 45 day period...or it might be 49. cant remembe cause ive never done it

 

[Whiskers]

The link to the Ernst and Young paper (PDF) at the bottom of this page http://www.asx.com.au/investor/options/trading_information/taxation.htm on the ASX should help with some explanation.

 

[Family_Guy]

So that relates to options. Is there a 45 day thingy happening on standard shares? Because i am realativly new to buying and selling and on three occasions since the start of May, i bought and sold for profit on the same day. And i have many sales where i only held parcels for 4 or 5 days.

 

[Hyperion]

Family Guy,

Whiskers is referring to the link 2nd from the bottom entitled " The Holding Period and Related Payment Rules: 45 Days to Offset"

Its very good, albeit technical.

 

[Family_Guy]

Cheers. Thanks, more to read.

 

[RamonR]

45 day holding rule

From my understanding I have to hold shares for 45 days before they go ex-dividend.

However reading some material on the asx website about dividend yield play. It implies that you have to hold the shares for 45 days. So you could buy on day they go ex div and as long as you held them for 45 days you are eligible for the franking credits.

Which is it?

 

[cutz]

Re: 45 holding rule

Hold them for 45 days after purchase.

 

[skyQuake]

Re: 45 holding rule

Only applies if you are trying to claim > $5000 of franking credits

 

[RamonR]

Re: 45 holding rule

great to hear.

 

[RamonR]

Re: 45 holding rule

Only applies if you are trying to claim > $5000 of franking credits

glad to say I will be claiming > $5000

 

[awg]

Re: 45 holding rule

dudes, that is LESS than $5000

ie < $5000

if you want to claim the franking credit, by selling within 45 days

http://stockmarketinvesting.com.au/Dividends.html

 

[skyQuake]

Re: 45 holding rule

Oops, to clarify:

Claiming > $5k franking credits - Hold > 45 days
Claiming < $5k franking credits - Hold however long you want.

 

[jono1887]

Re: 45 holding rule

Oops, to clarify:

Claiming > $5k franking credits - Hold > 45 days
Claiming < $5k franking credits - Hold however long you want.

Yep, this is correct.

 

[Sir Osisofliver]

Re: 45 holding rule

Oops, to clarify:

Claiming > $5k franking credits - Hold > 45 days
Claiming < $5k franking credits - Hold however long you want.

Actually this is almost correct. From here http://www.ato.gov.au/corporate/content.asp?doc=/content/18898.htm

"The 45-day rule aims to eliminate franking credit trading where franking benefits are received by someone other than the true economic owner of the underlying shares. The rule requires resident taxpayers to hold shares for at least 45 days to be eligible to receive franking benefits from dividends paid on shares. Furthermore, even if the shares were held for at least 45 days, the franking credit is denied if the resident taxpayer has eliminated 70 per cent or more of the ownership risk through other financial transactions during that period. Hence, the rule also specifies a 30 per cent minimum level of ownership risk.

The 45-day rule applies to direct and indirect holdings. However, special considerations apply in relation to interests in shares held through trusts where the interest is itself inherently risk-free.

There are several exceptions to the 45-day rule. One of these is the small shareholder exemption which exempts shareholders from applying the 45-day rule by electing to limit the amount of total franking rebates to which they are entitled. The threshold for the full franking rebate under this rule was $2000." (Changes have made this now $5000)

Cheers

Sir O