Division 7A

The ATO is continually monitoring Division 7A as it has been recognised as a high risk area of tax.

Division 7A tax applies to all loans, advances, and other credits made by private companies to shareholders, or their associates.

It is important to consider any tax consequences under Division 7A. For example, if:

-shareholders or associates have extracted profits from a private company during the year other than by dividend

-a shareholder or associate uses an asset of the private company and does not pay the company for its use or pays less than an arm’s length amount

-intra group loans have been made by a private company

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