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Are your privates caught?: avoiding and solving Division 7A problems

Published on 25 Jul 00 by SOUTH AUSTRALIAN DIVISION, THE TAX INSTITUTE

Division 7A was enacted largely to overcome apparent deficiencies in the operation of section 108 of the Assessment Act. Section 108 treats as a dividend any amount paid or credited by a private company to a shareholder (or associate of a shareholder), to the extent that the amount so paid or credited represents a distribution of profits. However, the effectiveness of section 108 was often uncertain, due to problems in determining when moneys were paid or credited, whether genuine profits existed, and the intentions of the company and shareholder at the time of the distribution (ie whether a payment or distribution should be treated as a loan). Division 7A addressed those problems in the manner set out in this paper.

Author profiles:

Andrew SHAW
Current at 15 June 2009 Click here to expand/collapse more articles by Andrew SHAW.
 
Terry LEWIS
Terry Lewis FTIA is a partner at Lewis Richmond. Terry’s knowledge and experience spans a broad range of tax issues relating to SME’s, including capital gains tax, tax losses and Division 7A.
Current at 16 July 2008 Current at 23 August 2008 Click here to expand/collapse more articles by Terry LEWIS.

 

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