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  • Targeted amendments to Division 7A

    Tax Integrity — further consultation on amendments to Division 7A

    In the 2019-20 Budget, the Government announced that start date for the previous Budget announcements will be deferred to apply from 1 July 2020.

    Clarifying the operation of the Division 7A integrity rule

    As part of the 2018-19 Budget, the Government announced it will further clarify the operation of the Division 7A integrity rule

    The changes will include:

    • For unpaid present entitlements to come within the scope of Division 7A of the Income Tax Assessment Act 1936
    • A deferral of the start date of the 2016-17 announced ‘Targeted amendments to Division 7A’ to 1 July 2019.

    This will enable the Government to ensure that all Division 7A amendments will be progressed as part of a consolidated package.

    Targeted amendments to Division 7A

    In the 2016-17 Budget, the Government announced it will make targeted amendments to improve the operation and administration of Division 7A of the Income Tax Assessment Act 1936 (Division 7A).

    The amendments were to apply from 1 July 2019, but will now apply from 1 July 2020 and will introduce:

    • a self-correction mechanism to assist taxpayers to rectify inadvertent breaches of Division 7A promptly
    • appropriate safe harbour rules to provide certainty and simplify compliance for taxpayers
    • simplified rules regarding complying Division 7A loans, including in relation to loan duration and the minimum interest rate
    • a number of technical amendments to improve the integrity and operation of Division 7A and provide increased certainty for taxpayers.

    The proposed changes draw on a number of recommendations from the Board of Taxation’s Post Implementation Review into Division 7A.

    Treasury consultation

    A consultation paperExternal Link was released on 22 October 2018. Submissions closed on 21 November 2018.

    More information

      Last modified: 30 May 2019QC 50871