What is the Commissioner's discretion?
The Commissioner may disregard a deemed dividend that would otherwise arise under Division 7A, subject to specified conditions being complied with. Alternatively, the Commissioner has a discretion to allow the private company to choose to frank the deemed dividend.
For the Commissioner to be able to exercise the discretion, the deemed dividend must have arisen because of an honest mistake or an inadvertent omission by the shareholder (or their associate) of the private company or any other entity whose conduct contributed to the deemed dividend.
The shareholder (or their associate) or the private company (or both) may apply to the Commissioner to exercise the discretion.