Australia: Imputation benefits and use of derivative instruments in structured arrangements

Australia: Imputation benefits

The Australian Taxation Office (ATO) issued a taxpayer alert, expressing concerns that some Australian taxpayers involved in certain arrangements intended to provide imputation benefits in respect to a parcel of shares may be claiming imputation benefits that they are not entitled to under the law.


Read the taxpayer alert—TA 2020/5 Structured arrangements that provide imputation benefits on shares acquired where economic exposure is offset through use of derivative instruments

  • The ATO has become aware of the common use of derivatives in combination with the holding of physical assets to obtain the desired exposure to underlying investment assets.
  • While the ATO has no concerns with the use of derivatives per se and understands their use in a re-balancing scenario, there are concerns in relation to certain structured arrangements that provide imputation benefits, when economic exposure is offset through the use of derivative instruments. 
  • In the taxpayer alert, the ATO has articulated its views on the type of structured arrangements for which it has compliance concerns. In particular, the taxpayer alert provides four examples of specific transactions that the ATO has concerns about. 
  • In addition, the taxpayer alert provides the ATO’s view on how it calculates the delta over a parcel of shares, including the parcel of shares that is the subject of the structured arrangement. 
  • Further, when these shares are acquired directly or via acquiring units in a managed fund, the ATO provided its views on what provisions it would rely on to deny the imputation benefits in each scenario.

For more information, contact a KPMG tax professional in Australia:

Damian Ryan | +61 2 9335 7998 |

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us