Tag Archives: Div 7A

Div 7A and financial accommodation

A new draft ruling has been released on when “financial accommodation” applies and thus a Div 7A loan occurs in private group arrangements involving unpaid present entitlements and use of sub-trusts. Importantly, the views contained in the draft ruling differ from the ATO’s previous substantive ruling on the issue. Once finalised, this new ATO view will apply from 1 July 2022. The previous ruling, along with an associated practice statement will be withdrawn but will still apply to trust entitlements arising before 1 July 2022.

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Debt forgiveness due to love and affection

Private companies that pay amounts of money, make loans, or forgives debts of shareholders or associates of shareholders, may be subject to Div 7A rules which are designed to ensure that income is not inappropriately sheltered at the corporate tax rate. Generally, these rules deem certain moneys and/or benefits (eg loans and forgiven debts) obtained from...
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Deemed Dividends: Changes Are Coming

If you own a private company, deemed dividend payments or Div 7A may be familiar to you. In short, it is designed to ensure that income is not inappropriately sheltered in corporate structures at the corporate tax rate. It usually applies when a private company provides a benefit to a shareholder (or their associate), and...

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