Is there any provision for hardship?

A private company is not taken to pay a dividend in relation to arrangements of the type illustrated in Diagram 4 if the Commissioner of Taxation is satisfied that:

  • the target entity would suffer undue hardship if the private company were taken to pay a dividend to the entity because of the liability, and
  • when the target entity entered into the loan, the entity had the capacity to repay the loan.
Further Information

Apply in writing to the Tax Office addressing the above points if you consider you will suffer undue hardship if an amount is treated as a dividend.

End of further information
    Last modified: 18 May 2013QC 17380