THE Australian Government has invited suggestions from experts on proposals to seal a loophole in the corporate tax system that permits investors to engage in a process called dividend washing which enables shareholders to claim two sets of franking credits on what the Government says is effectively the same parcel of shares.

Treasurer Wayne Swan in his 2013-14 Budget chalked out roadmap to do away with this practice for the first time. The Australian Government has proposed that when an investor sells shares ex dividend, nevertheless retaining the right to both the dividend and franking credits, and then immediately purchases equivalent cum dividend shares, that investor will only be entitled to claim one set of franking credits. The changes will be targeted to the special two day period after a share goes ex-dividend. They will not impact investors with franking credit tax offset entitlements below an AUD5, 000 (USD4, 782) threshold.