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  • Payments treated as dividends

    Attention

    Warning:

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

    End of attention

    Payments made by a private company to a shareholder or associate that are treated as deemed dividends include:

    • an amount paid or credited to the shareholder or associate
    • an amount paid or credited on behalf of, or for the benefit of, the shareholder or associate
    • a transfer of property to the shareholder or associate.

    A payment does not include an amount which is a loan. The amount paid or credited is deemed to be a dividend to the extent of the private company's distributable surplus.

    Example

    Vanessa owns shares in a private company, X Pty Ltd. On 30 June 2000, X Pty Ltd makes a payment of $5,000 to Vanessa's father, Frank. Frank is not an employee of X Pty Ltd, and he is not an associate of an employee of the company. The payment will be taken to be an unfranked dividend paid to Frank, and he must include the $5,000 as assessable income at S item 10 on his 1999-2000 tax return.

    Last modified: 05 Dec 2006QC 16138