International Law

Division 7A provides tax integrity rules designed to prevent private companies from making tax?free distributions of profits to shareholders (or their associates). In particular, advances, loans and other payments or credits to the shareholders or associates are, unless they come within specified exclusions, treated as assessable dividends to the extent that the company has realised or unrealised profits.

The Government's announced changes extend the Division 7A rules so that 'payment' includes the use of company assets by a shareholder (or their associate) for free or at less than their market values.

The changes include amendments to prevent corporate limited partnerships being used to circumvent the non-commercial loan rules.

Comments on the discussion paper can be made until 3 July 2009.