Significant proposed Division 7A changes

BNR Partners regularly consults on the potential impact of Division 7A of the Income Tax Assessment Act (1936) on its clients including private companies that form part of a deceased estate.

To recap, Division 7A ensures that the making of a payment or loan by a private company to a shareholder or associate, or the forgiveness of a debt owed by the shareholder or associate to the private company, is treated as an assessable unfranked dividend to the shareholder or associate for the amount of that payment, loan or debt forgiveness unless an exception applies.

Our in-house Senior Tax Counsel Mark Morris has extensive experience in consulting on Division 7A and has compiled a summary of the proposed reforms to those provisions set out in a recent Treasury Consultation Paper which will add to the complexity and severity of Division 7A should these changes apply from 1 July 2019 as currently proposed.

Our bulletin on the proposed changes can be found here