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Division 7A: awaking the sleeping giant paper


For many, the application of Division 7A leaves practitioners in a quandary. The provisions were far too easily breached, and the resultant 'solutions' unpalatable to both clients and advisers. In this way, Division 7A has become a sleeping giant for all who must deal with it.

On 9 December 2006, Minister Dutton announced sweeping changes to address the compliance issues associated with the Division. Legislation to effect these changes was introduced into Parliament on 10 May 2007. The changes include:

  • reduction of the double-penalty nature of Division 7A
  • ability for Commissioner to exercise discretion in relation to deemed dividends
  • defining the interaction of FBT and Division 7A.

This paper reviews:

  • the changes and provide practical advice on just how far the changes extend
  • the likely actions that can now be taken to mitigate existing Division 7A exposures
  • the ongoing risks facing taxpayers in this area.

Author profile

Prof Gordon Cooper
Gordon was a Chartered Accountant in sole practice at Cooper & Co. He was an Adjunct Professor in the School of Taxation and Business Law (incorporating the Australian School of Taxation) at the University of New South Wales. In June 2003, he was awarded an AM in the Queen’s birthday honours for “Services to the tax profession and to the community as an adviser on national taxation and legislative reform, and through education and professional organisations”. Together with Chris Evans and Kirk Wilson, he was an author of the Australian CGT Handbook. - Current at 27 June 2017
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Division 7A: awaking the sleeping giant

Author(s):  Gordon S COOPER

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