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Loans & Division 7A - Don't be caught out!

Published on 07 Sep 2006 | Took place at City West Function Centre, West Perth, WA

Loans are seldom what they seem. Clients, Lawyers and Accountants all have different views on what loans are: everyday transactions, loans at law or the result of a series of journal entries. Does the ATO's view on pre-Division 7A loans help or merely add to the confusion?

This seminar stepped through the traps waiting for us in relation to Division 7A giving clear examples of the pitfalls.

Have you forgotten about Section 108? Can these payments still bite your clients? The Commissioner’s view on statute barred loans seems convenient, but can we rely on it?

Individual sessions

Loans and Division 7A - Don't be caught out!

Author(s):  Syd JENKINS

This paper seeks to:

  • provide a brief history of s 108 and Division 7A
  • draw upon history to help us understand the current application of both s 108 and Division 7A
  • consider what ‘loans’ are subject to Division 7A and the characteristics of such loans with special reference to the role of trusts and the concept of present entitlement in Division 7A
  • consider what is meant by distributable surplus as defined in s 109Y(2) of the Act and what help we may find in consideration of the term profit in the history of s 108 of the Act
  • consider the Commissioners Practice Statement PS LA 2006/2 and the treatment of statute barred loans
  • examine some common mistakes in the interpretation and application of Division 7A and some unanswered issues or maybe opportunities.
Materials from this session: