Share capital tainting
This fact sheet explains the operation of some key concepts in the share capital tainting rules in the income tax law. The share capital tainting rules are integrity measures designed to prevent a company from making tax preferred capital distributions from a share capital account to which the company has transferred profits.
The status of this fact sheet will provide users with protection from interest and penalties where a person reasonably relies in good faith on the statements in the publication.
Where the fact sheet does not provide sufficient guidance or certainty to assist a taxpayer in relation to their particular circumstances, consideration should be given to applying to the Tax Office for a private ruling.
The Tax Office has published its Compliance program for 2007 / 2008. Share capital tainting is not an issue which will be specifically targeted. However, share capital tainting issues may arise in the course of other compliance activities and if they do the share capital tainting provisions will be applied in accordance with the law.
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08-12-2008, 11:24 AM
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