Introduction: Division 7A of the Income Tax Assessment Act 1936 is an integrity rule designed to prevent private companies from distributing profits to shareholders (or their associates) tax-free under the guise of loans or other paymentscpaaustralia.com.au. In practice, if a company director or shareholder takes a loan from their own company without proper arrangements, that loan can be treated as an unfranked deemed dividend – meaning it’s added to the shareholder’s taxable income without any franking credits (resulting in essentially double taxation of those profits)bristax.com.au. A critical concept in this process is the company’s Distributable Surplus. This guide explains what distributable surplus means (per Australian Taxation Office (ATO) guidance), how it determines whether a Division 7A loan is treated as a deemed dividend, the formula for calculating it, and strategies to manage or avoid adverse tax consequences. We’ll also illustrate with examples and point to relevant ATO rulings like TR 2010/3 for further reference.
Looking for reliable bookkeeping and tax support in Newcastle? At TK Bookkeeping, we help business owners stay compliant and grow with confidence.
✅ Free site visits / home visits – we come to you ✅ Training on Xero, MYOB & QuickBooks ✅ GST, BAS & IAS lodgements ✅ Bank reconciliations & cashflow insights ✅ Business performance advice & tax planning ✅ Management advisory & business improvement tips
💰 Pricing
Individual Tax Returns: $80 (extra if business income included)
TK Bookkeepers
Introduction: Division 7A of the Income Tax Assessment Act 1936 is an integrity rule designed to prevent private companies from distributing profits to shareholders (or their associates) tax-free under the guise of loans or other paymentscpaaustralia.com.au. In practice, if a company director or shareholder takes a loan from their own company without proper arrangements, that loan can be treated as an unfranked deemed dividend – meaning it’s added to the shareholder’s taxable income without any franking credits (resulting in essentially double taxation of those profits)bristax.com.au. A critical concept in this process is the company’s Distributable Surplus. This guide explains what distributable surplus means (per Australian Taxation Office (ATO) guidance), how it determines whether a Division 7A loan is treated as a deemed dividend, the formula for calculating it, and strategies to manage or avoid adverse tax consequences. We’ll also illustrate with examples and point to relevant ATO rulings like TR 2010/3 for further reference.
8 months ago | [YT] | 1
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TK Bookkeepers
Looking for reliable bookkeeping and tax support in Newcastle?
At TK Bookkeeping, we help business owners stay compliant and grow with confidence.
✅ Free site visits / home visits – we come to you
✅ Training on Xero, MYOB & QuickBooks
✅ GST, BAS & IAS lodgements
✅ Bank reconciliations & cashflow insights
✅ Business performance advice & tax planning
✅ Management advisory & business improvement tips
💰 Pricing
Individual Tax Returns: $80 (extra if business income included)
Bookkeeping (monthly):
• Up to 100 transactions – $49
• 101–300 transactions – $100
• 300+ transactions – flexible, mutually agreed
📍 Based in Newcastle, NSW – serving local businesses with affordable, professional support.
👉 Call/Text us today to book your free site visit and see how we can help your business.
📧 admin@thekandy.com.au
📞 0469 735 780
9 months ago | [YT] | 2
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