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06 Feb 09 Division 7A Working Party

On Friday 30 January 2009 Michael Hine FTIA (KPMG) represented the Taxation Institute at the Division 7A Working Party meeting. This was the first meeting of the Group since February 2008, and the agenda included discussion on a proposed practice statement dealing with the future exercise of the Commissioner’s discretion under section 109RB, as well as an update on ATO compliance activities. The ATO is moving more into a compliance phase looking at targeting questionnaires to potential higher risk transactions and profiles to ascertain compliance with the provisions at both a client and an agent level.

There was “robust” discussion on the potential focus of any additional ATO Practice Statements, and the members of the taskforce have agreed to provide further examples to the ATO as to when the discretion should be exercised. One of the challenges facing the ATO in developing a product in respect of the concession is a lack of examples. In the past, a request for examples from the taskforce members, which was echoed in this column, resulted in a very small response.

Therefore, members are encouraged to provide examples as soon as possible of the fact patterns where they believe Division 7A operates and where there would be an expectation of the Commissioner's discretion being exercised. The more practical examples the more likely the proposed Practice Statement will be practical. Any examples can be sent to: for incorporation in a response to the Commissioner.

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