Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

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

Subdivision D - Payments and loans that are not treated as dividends  

SECTION 109J  

109J   PAYMENTS DISCHARGING PECUNIARY OBLIGATIONS NOT TREATED AS DIVIDENDS  

A private company is not taken under section 109C to pay a dividend because of the payment of an amount, to the extent that the payment:

(a) discharges an obligation of the private company to pay money to the entity; and

(b) is not more than would have been required to discharge the obligation had the private company and entity been dealing with each other at arm's length.