18 May 2012: The Government is to be congratulated for initiating a post-implementation review into the impact of tax laws on deemed dividend payments by private companies, The Tax Institute said today.
“The private company payments laws in Division 7A of the Income Tax Act have been a bugbear for tax professionals since their inception 14 years ago,” said The Tax Institute’s President, Ken Schurgott.
“The recent actions by the ATO on unpaid present entitlements owed by trusts to private companies has created controversy and only exacerbated the problems faced by tax professionals in trying to navigate this complex area of law,” he said.
“Trusts and private company groups rely heavily on internally generated funds as a source of finance, particularly in the SME market, and the ATO’s actions have markedly increased the cost.”
A review examining the effectiveness of Division 7A is timely as the provisions now have considerable history behind them. “It is an opportune time for the Board of Tax to closely examine the experience the tax profession has had with these provisions,” Mr Schurgott said.
“We hope that the scope of the post-implementation review will be appropriately wide-ranging and will allow extensive public consultation on all aspects of Division 7A.”
For more information contact:
- Robert Jeremenko, Senior Tax Counsel, The Tax Institute: 02 8223 0011, 0468 987 300
- Dylan Malloch, Sefiani Communications Group: 02 8920 0700, 0407 620 613