• Disregard a deemed dividend

    The Commissioner may decide to disregard the deemed dividend that otherwise arises under Division 7A.

    If a deemed dividend is disregarded because of the exercise of the discretion and there has previously been a debit to the private company's franking account because of the deemed dividend, the franking account can be re-credited by the amount of the debit.

    The Commissioner may make his decision subject to a condition that:

    • the shareholder, associate of the shareholder, or any other entity must make specified payments to the private company or another entity within a specified time - for example, an amount equal to the minimum yearly repayments that would have been made if all the conditions of Division 7A had been complied with, and/or
    • a specified requirement of Division 7A be met within a specified time - for example, that the full amount of any payments made to a shareholder be converted into a loan that satisfies all the requirement set out in section 109N for the income year in which the loan was made.

    If these conditions are not complied with by the specified timeframe, the deemed dividend is not disregarded.

      Last modified: 27 Jul 2016QC 19545