45 Day Holding Period Rule - Don't Give Your Money Wings

Next Saturday, May the 16th is an important day for all share investors. The reason this day is so important is that it is 45 days out from the end of the tax year.

So why is that important I hear you ask?

Because there is a little known provision in the tax law called the Holding Period Rule. In its very simplest form the Holding Period Rule denies shareholders credit for franking tax credits attached to dividends they earn on their shares when they have held those shares for less than 45 days. Therefore any franking credits attached to dividends on shares acquired cum dividend between May 16th and June 30th are potentially lost.

The Fine Print and the Solution

As with most things tax the rule is not as simple as summarised above, but the risk most certainly is that simple.

Don't let your money fly away, a 30% franking credit is a significant part of your income to lose, and remember you will still be taxed on the money you never received!!

The solution is quite simple though - If you are planning on buying shares between May 16th and June 30th and those shares are cum dividend then make sure you understand this rule and its technicalities. The easiest way to do this is to give us a call on (07) 5439 1600 or CLICK HERE TO MAKE AN APPOINTMENT to see one of our qualified advisers.