TaxTMI 
TaxTMI 
Dividend stripping: statutory rules can ignore capital losses near record dates, with uncertainty after dividend taxation reform.
The article explains statutory anti-avoidance rules that ignore capital losses arising from acquisitions and disposals around a record date where dividends or bonus allotments are involved: dividend stripping rules disallow losses to the extent of exempt dividend when acquisition and disposal fall within prescribed pre- and post-record date periods; bonus stripping rules ignore losses on original units and deem such ignored loss as the cost of allotted bonus units when prescribed conditions are cumulatively met. It also discusses the Budget 2020 change making dividends taxable and the resulting uncertainty over application of the dividend-stripping restriction. (AI Summary)
The article explains statutory anti-avoidance rules that ignore capital losses arising from acquisitions and disposals around a record date where dividends or bonus allotments are involved: dividend stripping rules disallow losses to the extent of exempt dividend when acquisition and disposal fall within prescribed pre- and post-record date periods; bonus stripping rules ignore losses on original units and deem such ignored loss as the cost of allotted bonus units when prescribed conditions are cumulatively met. It also discusses the Budget 2020 change making dividends taxable and the resulting uncertainty over application of the dividend-stripping restriction. (AI Summary)
15 Jul 2020 
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