This TD, released on Wed 6.6.2012, states that the rules in Subdiv D of Div 7A of Pt III of the ITAA 1936 (which exclude certain payments or loans from being treated as dividends under Subdiv B) do not necessarily affect the circumstances in which a deemed payment or notional loan arises under Subdiv E. Whether or not the exclusion rules in Subdiv D have an impact on the application of Subdiv E will depend upon the facts and circumstances of each case.
Subdivision D excludes certain payments or loans from being treated as dividends under Subdiv B of Div 7A. For example, payments of genuine debts to an entity, payments and loans to other companies and otherwise assessable payments or loans are excluded from the general rules in Subdiv B under ss 109J, 109K and 109L, respectively.
The ATO says the point to be made is that the deemed circumstances from the operation of the interposed entity rules in Subdiv E can give rise to deemed dividends under Subdiv B notwithstanding the exclusion rules in Subdiv D. The interaction of all the various provisions contained in Div 7A need to be considered in the context of the particular circumstances under consideration.
The TD was previously released in June 2011 as Draft TD 2011/D7.
DATE OF EFFECT: The TD applies to years before and after its date of issue.
[LTN 108, 6/6]