Tax Laws Amendment (2007 Measures No. 3) Act 2007 (79 of 2007)

Schedule 1   Distributions to entities connected with a private company and related issues

Part 1   Main amendments

Income Tax Assessment Act 1936

9   After subsection 109G(3)

Insert:

Reduced dividend for forgiveness of loan debt if loan causes dividend under section 109E

(3A) Subsection (3B) applies if:

(a) a private company is taken under section 109F to pay a dividend at the end of a year of income because of the forgiveness of an amount of a debt resulting from a loan; and

(b) the private company is taken under section 109E to pay a dividend at the end of an earlier year of income in relation to the loan.

(3B) The amount of the dividend mentioned in paragraph (3A)(a) is reduced by the amount of the dividend mentioned in paragraph (3A)(b) (but not below zero).

Note: There may be more than one reduction under this subsection if the private company has been taken under section 109E to pay more than one dividend in relation to the loan.