• Which payments are not treated as dividends?

    A payment is not treated as a dividend:

    • if it discharges an obligation of the private company to pay money to you, and the payment is not more than the amount required to discharge the obligation if you and the company were dealing at arm's length
    • if it is made to another company (but not in the capacity of trustee)
    • if the payment would be included in your assessable income (under a provision of the tax law other than Division 7A)
    • if the payment would be excluded from your assessable income (under a provision of the tax law)
    • if it is a distribution made in the course of a liquidator winding-up a company
    • if it is made to you in your capacity as an employee or an associate of an employee - for more information, refer to the fact sheet Division 7A and fringe benefits tax (FBT)
    • if it was made on or after 23 June 2009 to a capital gains tax concession stakeholder under subsection 152-325(1) of the Income Tax Assessment Act 1997 (a retirement exemption payment)
    • for provision of asset payments (other than transfer of property), minor use of company assets, certain payments that would otherwise be allowable as once-only deductions and the use of certain residences - for more information, see Exceptions to payments that arise from provision of an asset for use (other than a transfer of property).

    Example 5

    Helen, a shareholder of Riley Pty Ltd, lends the company $1,000. Riley Pty Ltd repays the loan by making a payment of $1,000 to Helen. The payment will not be treated as a dividend because the payment discharges an obligation of Riley Pty Ltd to pay money to Helen and the payment is not more than the arm's length value of that obligation.

      Last modified: 27 Jul 2016QC 17340