45 Day Rule

[nto]

Hi,

Does the 45 day rule apply for each share I hold or once I exceed $5K all my shares have to be held for at least 45 days to receive cranking credits.

ie. I receive

SHARE A - $3000.00 Dividend
SHARE B - $5001.00 Dividend

Does it mean I have to HOLD both A & B for 45 days to get franking credits. Or does it mean I can sell SHARE A anytime I want ie after 10days and I have to keep SHARE B for at least 45 days.

Sorry for all these newbie questions...

Thanks
Norm

 

[tech/a]

Don (Rosella) is the resident dividend expert Im sure he will answer your question.

BUT gotta say that its worth holding out for those

CRANKING CREDITS.

 

[nto]

haha yeah.

having a cranky day at work...my hands are speaking my mind I think

Thanks
Tech

Norm

 

[kooka1956]

NTO , if you are the holder of shares as at the ex dividend date you are entitled to dividend as at the books closing date . I am not sure what you mean by your 45 day rule.You will note many times that after books close for a dividend shares tend to correct by a similar amount to adjust for the dividend being paid out. So you could buy shares the day prior to the ex date and sell them the day after ex date, and be entitled to the dividend . You may only have held shares for two or threedays ,they are not yet registrerd in your name,but a dividend adjustment is made between brokers and you will eventualy be paid the dividend. Regards KOOKA

 

[tech/a]

. So you could buy shares the day prior to the ex date and sell them the day after ex date, and be entitled to the dividend

You sure about that.

Think thats what the 45 days is about.

Where's a bloody Parrot when you need one!!

 

[nto]

Hi,

I was referring to franking credit tax rules. If you exceed $5K in franking credits you need to hold for 45 days the shares to get franking credits in your tax return. My question is referring whether it is for dividends for one set of shares or the total of all shares.

Thanks
Norm

 

[rozella]

Have a read of what the ATO has written on their fact sheet about cranking credits

45 Day Rule

Basically it means that an individual can have an exemption as a small shareholder & trade under 45 days (plus buy & sell days = 47) provided that their total franking credits don't exceed $5000. If you have joint ownership & each have their own taxfile no. then you would have $5000 each. A SMSF also has this exemption.

e.g. for an individual.

Franking Credits under 47 days incl buy & sell days = $3000
Franking Credits over 45 days = $2500
Total = $5500 so you have exceeded the allowable amount, therefore you lose those franking credits under 47 days & only have a claim for $2500

It is fairly easy to obtain $18000 dividends per tax entity with the mix of zero franked stocks with 100% franked. So if your stocks are held jointly with say your wife or anybody that has their own tax file no. plus a SMSF, you can have total franking credits up to $15000 with dividends approx $54000.

After that you can enjoy the rise upto somewhere prior to exdiv day & sell.

Depending on the amount of trading capital you are using, whether it is worthwhile just foregoing the under 47 day franking credits.

If you have a look on my website under Trading Diary you will see real examples of dividend trading that show the number of days held for each stock. Read it inconjuction with the Margin Trading.

As of 10th December 2004 total franking credits were $5577.95 with another $784.82 pending on stocks that have past exdiv date but not received.
So this $5577.95 will depend whether the stocks are jointly owned or by one individual as to losing all those franking credits under 47 days which in this case is approximately half if you wish to add them up.

exdividendwatchlist

Margin Trading

Trading Diary

Sorry to hear about your cranky day Norm

rozella

 

[rozella]

You sure about that.

Think thats what the 45 days is about.

Where's a bloody Parrot when you need one!!

Sorry tech/a, I was in the middle of a bowl of birdseed

rozella

 

[nto]

Thanks Rozella,

I have reading your site...excellent advise.

When I finally getting around to dive into buying some shares I will definitely like to try to use your strategy and your guide.

Thanks
Rozella