New tax laws to tackle 'dividend washing'

In a move to tackle 'dividend washing' and prevent further government revenue loss, Labor will today release a Treasury discussion paper suggesting three tax law changes effective July 1, The Australian Financial Review reports.

The practice, which allows sophisticated investors to gain two lots of franking credits, costs the government $20 million a year and is likely to increase if the practice is not curbed, the newspaper says. 

Dividend washing is used by foreign investors who are unable to use franking credits so pass them on to local investors instead.

However, tax experts say government intervention could stifle legitimate market activity.

Responses to the paper can be put forward until June 14, the newspaper reports.

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The proposed changes will only apply to investors that have franking credit tax offset entitlements in excess of $5,000, so that the typical ‘mum and dad’ investors will not be affected by the proposed changes.
$20 million? Really? They are going to waste their time on an amount so small when surely there are other things they could consider with a far greater potential return.
Let's not be to hasty James, $20 million is Big Bucks...isn't it around double what they are getting from the Mining resources Tax? ;-)