Foundations of taxation law 234c cch australia

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Foundations of Taxation Law [¶23.4](c) © CCH Australia Limited Deemed dividends (Div 7A  Deemed dividends (Div 7A  ITAA36) ITAA36) A private company is deemed to have paid a  dividend where: It pays an amount to a shareholder or an  associate of the shareholder (s 109C)  It makes a loan during an income year to a  shareholder or an associate of the shareholder  which is not fully repaid by the “lodgment day” (s  109D) It forgives a debt it is owed by a shareholder or  an associate of the shareholder (s 109F)
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Foundations of Taxation Law [¶23.4](d) © CCH Australia Limited Div 7A does not apply to: Payments of genuine debts (s 109J)  Payments and loans to other companies (s109K)  Payments and loans that are otherwise  assessable income (s 109L) Loans made in the ordinary course of business  on ordinary commercial terms (s 109M) Loans made in writing that meet minimum  interest rate and maximum term requirements  (25 years for eligible secured loans and 7 years  for other loans) (s 109N) Exclusions to Div 7A Exclusions to Div 7A
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Foundations of Taxation Law [¶23.5](a) © CCH Australia Limited Taxation of dividends (overview) Taxation of dividends (overview) Tax law contains complex rules for taxing  dividends paid to shareholders – these rules  depend on many different factors, including  whether the shareholder is a resident or non- resident In general, dividends may be taxed under: The “general assessment rules” contained in s  44(1) The “withholding tax rules” contained in s 128B These rules operate subject to many  exceptions
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Foundations of Taxation Law [¶23.5](b) © CCH Australia Limited Taxation of dividends (main rules for  Taxation of dividends (main rules for  resident shareholders) resident shareholders) Resident shareholders are generally required to  include dividends in their assessable income (s  44(1)(a))  The following dividends are non-assessable  non-exempt income: “Non-portfolio foreign dividends” paid to a  resident company by a company that is not a  “Part X Australian resident” (s 23AJ) Dividends paid to a resident shareholder out of  income that has been previously attributed to the  shareholder under the “CFC” and “FIF” accruals  taxation regimes (s 23AI and s 23AK)
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Foundations of Taxation Law [¶23.5](c) © CCH Australia Limited Taxation of dividends (general rules  Taxation of dividends (general rules  for non-resident shareholders) for non-resident shareholders) Dividends paid by resident companies to non- resident shareholders are generally subject to  withholding tax (s 128B(1)) Withholding tax does not apply to the franked  part of dividends (s 128B(3)(ga)
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