Income Tax Assessment Act 1936
This section sets out special rules for dealing with a dividend (the later dividend ) distributed by a private company if some or all of the later dividend is set off against some or all of an amount taken under this Division to be a dividend previously paid by the company.
Example:109ZC(1A) [ Repayment of certain loans from distributing company]
Some or all of a dividend distributed by a private company to a shareholder might be set off to reduce a loan the company had previously made to the shareholder that was treated as a dividend under Subdivision B.
(a) the private company distributes the later dividend to a shareholder in the company; and
(b) the shareholder applies the amount of the dividend to repay all or part of a loan:
(i) that was obtained from the private company by an associate of the shareholder; and
(ii) in relation to which a dividend was previously taken under this Division to have been paid by the private company.
The amount of the later dividend set off or applied is taken not to be a dividend for the purposes of this Act, except Part
Income Tax Assessment Act 1997
(which deals with franking of distributions). However, if the amount set off or applied exceeds the amount of the later dividend that is not either the franked part of that dividend, or the part of that dividend that has been franked with an exempting credit, the excess is still a dividend.
This prevents double taxation by ensuring that the entity's assessable income does not include the amount of the later dividend that is not paid to the entity (except to the extent that that amount is franked).
An amount that is taken not to be a dividend under subsection (2) is not assessable income and is not exempt income.
Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited
CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.
The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.