Division 7A: Private Company Payments, Loans and Benefits
Applied Division 7A problems.
Applied Questions
Question 1 — Shareholder payment
A private company pays a shareholder’s $24,000 personal credit-card bill and debits the amount to “shareholder expenses”. Identify the Division 7A starting point.
Question 2 — Loan before lodgment
A company advances $150,000 to a shareholder. The shareholder repays $20,000 and signs a written loan agreement before lodgment day. Explain what further facts determine whether a deemed dividend arises.
Question 3 — Complying term
Why is a written agreement alone insufficient to establish a complying s 109N loan?
Question 4 — Minimum yearly repayment
A shareholder has a complying Division 7A loan but pays less than the required minimum yearly repayment. What is the consequence to investigate?
Question 5 — Debt forgiveness
A private company formally releases its shareholder from a $90,000 debt. Identify the provision and the further calculation required.
Question 6 — Distributable surplus
The company provides $200,000 of benefits but has a distributable surplus of only $70,000. Explain the relevance of s 109Y.