Division 7A - A complete guide (125969864) - Learning Manual

Description

• Outline of Division 7A
• Payments, loans and debt forgiveness by private company
• Limits on deemed dividends under Division 7A
• Unpaid present entitlements
• Interaction with other provisions 

Learning objectives

• Describe how Division 7A applies to payments, loans and debt forgiveness by private companies to shareholders, former shareholders, other equity-holders and certain associates
• Identify when cash payments, credited amounts, transfers of property and the provision for the use of assets are deemed payments by private companies to entities, including all related exemptions, planning strategies and the operation of the interposed entity anti-avoidance provisions
• Determine when advances, the provision of credit or the making of an in-substance debt will be deemed to be loans made by private companies to associated entities
• Review scenarios where a debt forgiveness can arise, and the exclusions and strategies that may apply to mitigate any tax exposure
• Recognise that the amount of any deemed dividend is limited by the private company’s distributable surplus, and the scope of the Commissioner’s discretion to disregard the application of Division 7A
• Examine when unpaid present entitlements owed by trusts to private company beneficiaries are deemed loans, and the steps that may be potentially taken to ensure that a deemed dividend does not arise under Division 7A in respect of such an unpaid entitlement.
• Analyse the interaction of Division 7A and other key tax provisions.

Audience