Division 7A 2013

Division 7A and complex structures

Source: Taxation In Australia Journal Article

Published Date: 1 Oct 2013


TR 2010/3 and PS LA 2010/4 consider the circumstances in which a private company with an unpaid present entitlement (UPE) to an amount from an associated trust estate makes a loan to that trust within the meaning of Div 7A of Pt III of the Income Tax Assessment Act 1936. This article examines the ruling and practice statement, and a recent decision of the Administrative Appeals Tribunal which suggests that compliance with the ruling and the practice statement is mandatory. The author considers that the ruling and practice statement, and Div 7A itself, can never be ignored in any commercial enterprise structure, from the most basic to the most complex.

The article outlines the proper approach to UPEs in this context, and also considers typical scenarios in which Div 7A applies, other than a UPE scenario. Finally, the article examines the Commissioner’s discretion in s 109RB.

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Division 7A 2013

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