Show download pdf controls
  • Prevention of double taxation



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    As a general rule, if a subsequent dividend paid by the private company is used to offset an amount that has already been subject to tax as a deemed dividend, the later dividend will be included in assessable income under the relevant provisions only to the extent that it is franked.


    Simone is a shareholder in a private company, Z Pty Ltd. She borrowed, on a non-commercial basis, $500 from the company in September 1998. The loan was not repaid by 30 June 1999. Simone included an amount of $500 as assessable income-as a deemed dividend-on her 1998-99 tax return.

    In December 1999, Simone became entitled to receive an unfranked dividend of $1100 from Z Pty Ltd. However, Simone agreed that Z Pty Ltd would offset $500 of her entitlement against the outstanding loan and pay the balance of $600 to her. Because she had previously included the other $500-the loan which had been treated as a deemed dividend-on her 1998-99 tax return, Simone is required to include only an amount of $600 in her assessable income for the 1999-2000 year.

    End of example
    Last modified: 23 Dec 2019QC 16138