Income Tax Assessment Act 1936


Division 7A - Distributions to entities connected with a private company  

Subdivision EB - Unpaid present entitlements - interposed entities  


The following is a simplified outline of this Subdivision:

Payments and loans

This Subdivision allows an amount to be included in an entity's (the target entity's ) assessable income under Subdivision EA if an entity interposed between a trustee and the target entity makes a payment or loan to the target entity under an arrangement involving the trustee.

This result is achieved by treating the trustee as making a payment or loan of an amount determined by the Commissioner to the target entity.

The arrangement must involve the trustee and one or more interposed entities in making payments or loans for the purpose of the target entity receiving a payment or loan from an interposed entity.

If the target entity repays a fraction of the loan made by the interposed entity, the target entity is treated as repaying the same fraction of the loan taken to have been made by the trustee.

Some provisions that prevent payments or loans from giving rise to assessable income do not apply to payments or loans this Subdivision treats a trustee as making.

Present entitlements

This Subdivision similarly allows an amount to be included in an entity's assessable income under Subdivision EA if a private company is or becomes presently entitled to an amount from the net income of a trust estate interposed between the private company and another trust estate (the target trust ) under an arrangement involving the target trust.

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