The Assistant Treasurer on Fri 18.5.2012, announced that the Government had asked the Board of Taxation to undertake a post-implementation review of Division 7A of Pt III of the ITAA 1936 [which deems certain payments and loans out of private companies to be un-frankable dividends].
Since its introduction in 1997, Div 7A has been subject to numerous amendments to ensure the Division operates as intended. However, these amendments have increased its complexity and arguably led to unintended consequences, Mr Bradbury said.
He said the 2011 Tax Forum raised Div 7A “as a particularly thorny issue for small business.
The review will examine whether there are options to simplify Div 7A, while still ensuring the integrity and fairness of the tax system.
The Board has been asked to provide a final report to the Government by 30 June 2013.
Source: Assistant Treasurer’s press release, 18 May 2012
[LTN 95, 18/5]