This explains it PDFs Tax Concessions The Pooled Development Fund Program was established in 1992 to assist small to medium enterprises (SMEs) gain access to equity capital.
The PDFs program is governed by the PDF Act 1992 (Cth). Under the act, PDFs have favourable tax concessions, which include:
Shareholders are exempt from income and capital gains tax from the sale of their shares. However investors cannot claim a capital loss to offset gains. PDFs are taxed on 15% of income and gains from investments in SMEs instead of the normal 30% corporate tax rate PDFs are taxed 25% on other income and gains Despite the concessional PDF tax rates, PDFs can pass on franking credits at the 30% tax rate, which allows the investors to benefit from additional franking credits. Shareholders receiving franked dividends can choose to either be exempt from income tax (and forgo the franking credits) or asses the income in the normal fashion (including franking credits) Australian shareholders are exempt from income tax on unfranked dividends Non-resident shareholders in PDFs are exempt from both income tax and withholding tax for both franked and unfranked dividends Example:
A shareholder in a PDF receives $50 in unfranked dividends. This $50 in income is therefore tax-free. If the dividend was fully franked, the shareholder has the choice of electing to take the $50 tax-free, or take it as a fully franked dividend.
If this is the case, the grossed up amount is $71.43, with the imputation credit being $21.43. If the shareholder decides to sell the shares in the PDF, then any gains made are tax-free.
more info here http://www.asx.com.au/investor/lmi/how/pooled_dev_funds_tax.htm
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