Division 7A and winding up structures
Source: Taxation In Australia Journal Article
Published Date: 1 Dec 2015
Division 7A of the Income Tax Assessment Act 1936 (Cth) is concerned with the taxation of distributions to entities connected with a private company. This article examines in detail the rules in Div 7A as they can apply to winding up a company, the forgiveness of loans, the death of a controller and vesting of trusts. The article discusses payments by liquidators, including the extended meaning of payments, and loans by liquidators. Forgiveness of company loans is then discussed, including forgiveness that does not give rise to a dividend, transfer of property in repayment of debt, and forgiveness of loans through interposed trusts. The impact of Div 7A when a controller dies, and when trusts vest as part of winding up a group structure, is then examined. The article concludes with a description of recent recommendations of the Board of Taxation made as part of its post-implementation review of Div 7A.
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Details
- Published By: Michael Parker CTA
- Published On:1 Dec 2015
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