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Division 7A: Dealing with the “here and now”


While purported changes to Div 7A of the Income Tax Assessment Act 1936 (Cth) come and go, practitioners (and the ATO) have to deal with the existing law as it is. This article uses case study examples to focus on several practical issues confronting practitioners in dealing with the complexities of the current regime, and some of the common mistakes, including: (1) who or what is, or is not, an associate of a shareholder (this will include issues with lending to unit trusts and partnerships); (2) the traps in the various interposed entity anti-avoidance rules, including companies acquiring units in unit trusts and the application of these rules to the private use of asset provisions; (3) loans from trusts with unpaid present entitlements (UPEs): which ones count and which do not; (4) dealing with sub-trusts and Div 7A loans created from UPEs since 2010; and (5) PCG 2017/3.

Author profile

Richard Friend CTA
Richard spent most of the first 23 years of his professional career in Brisbane in the tax practice of Andersen and then Ernst & Young. He now operates a tax consulting business through Balena Tassa Pty Ltd. Richard has particular expertise in tax and related structuring issues for the private client market. Most of his work is done by way of consulting to, and providing training for, accountants and lawyers around Australia who operate in these areas. - Current at 19 May 2017
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