The Tax Office on Wed 6.6.2012, released this TD which deals with the issue of when income tax of a private company will be a “present legal obligation” for the purposes of the distributable surplus calculation under s 109Y(2) of Div 7A of Pt III of the ITAA 1936. It was previously released as Draft TD 2012/D1 and is essentially unchanged from the Draft.
The Determination provides that if a private company has a liability to pay instalments for an income year under Pt 2-10 of Sch 1 to the TAA 1953, and some or all of an instalment is unpaid as at 30 June, then the unpaid amount of that instalment will be a “present legal obligation” for the purposes of the distributable surplus calculation worked out at that time.
Likewise, it states that if a private company, which is a full self-assessment taxpayer, has an amount due and payable by reason of s 5(4) of the ITAA 1997, then this amount will be a present legal obligation for the purposes of the distributable surplus calculation worked out at 30 June of the income year which is subject to the deemed assessment under s 166A of the ITAA 1936.
The TD also states that if the Commissioner issues a private company with an amended assessment for any income year, then the amount payable under that assessment will be a present legal obligation for the purposes of the distributable surplus calculation worked out at the end of the income year subject to the amended assessment.
DATE OF EFFECT: The TD applies to years before and after its date of issue.
[LTN 108, 6/6]