• When does a failure to make the minimum yearly repayment on an amalgamated loan cause the shortfall to be treated as a dividend?

    From the 2006-07 income year, a shortfall in a minimum yearly repayment on an amalgamated loan may be treated as a dividend, subject to the private company's distributable surplus, if:

    • a private company made an amalgamated loan to you in an earlier year of income
    • the amalgamated loan is not repaid at the end of the current year
    • the amount paid to the private company during the current year for the amalgamated loan falls short of the minimum yearly repayment for the current year
    • the Commissioner does not exercise the discretion not to treat the amount as a dividend (see Commissioner's discretion not to treat an amalgamated loan as a dividend).

    In determining the amount paid to the private company during the current year, include all amounts paid for the amalgamated loan.

    In the first income year after the year in which an amalgamated loan is made, payments made before the lodgment day are included in the amount paid to the private company in the current year for the amalgamated loan (see example 7).

    These payments are also taken into account in determining the amount of the amalgamated loan that has not been repaid by the end of the previous income year (see example 6).

      Last modified: 27 Jul 2016QC 17341