Payments and other benefits not affected

The following payments and other benefits are not treated as Division 7A dividends:

• loans and other payments repaid before company's lodgment day for the year in which the payment or loan occurred
• amounts that are treated as assessable income or excluded from being assessable income under another provision of the income tax law
• payments that discharge an obligation of the private company to pay money that are consistent with the two parties dealing at arm’s length
• complying loans for the purpose of Division 7A
• payments that are converted to complying loans for the purpose of Division 7A before the private company's lodgment day
• loans made by the private company in the ordinary course of its business on the usual terms it makes similar loans to parties at arm's length
• payments (but not loans or debts forgiven) to shareholders or their associates in their capacity as an employee – Fringe benefits tax (FBT) may apply instead of Division 7A (see Division 7A and fringe benefits tax)
• loans solely for the purpose of enabling the shareholder or their associate to acquire certain shares or rights in the company under an employee share scheme
• payments or loans to shareholders or their associates that are companies except where the company shareholder or associate is trustee of a trust
• certain retirement exemption payments
• a distribution by a liquidator in the course of winding-up a company
• minor use of a company asset – where the value of the use is under $300
• otherwise deductible usage – that is, had the shareholder or their associate paid for the use of the asset they could have claimed the cost as an income tax deduction
• the use of certain residences.

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• Tax treatment of Division 7A dividends