Deemed dividends

Payments or other benefits a shareholder or an associate of a shareholder obtains from a private company, may be treated as if they were a taxable dividend paid to that shareholder or associate.

Payments made by a private company to a shareholder or associate which are treated as deemed dividends include:

  • an amount paid or credited to the shareholder or associate
  • an amount paid or credited on behalf of, or for the benefit of, the shareholder or associate, and
  • a transfer of property to the shareholder or associate.

A payment does not include an amount which is a loan. The amount paid or credited is deemed to be a dividend to the extent of the private company's distributable surplus.

These deemed dividends are generally unfrankable.

Find out more

You can view more information on this subject in our publication You and your shares (NAT 2632).

End of find out more
    Last modified: 09 Jul 2014QC 17505