Private ruling: Division 7A - deemed dividend
Date of advice: 16 March 2022
Published: May 2022
Ruling period: Year ending 30 June 20XY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Does the payment by the Company to youconstitute a dividend payable by the Company to youunder section 109C of the Income Tax Assessment Act 1936 (ITAA 1936)? | A1: No. The payment made by the Company to you discharged an obligation of the Company to pay money to you and therefore, section 109J of the ITAA 1936 will apply so the Company is not taken to pay a dividend to you under section 109C of the ITAA 1936.

Relevant facts and circumstances: You are a shareholder of the Company and you paid an amount to the Company. The amount was paid by you on the basis of advice from the Company. You and the Company subsequently agreed that the Company would repay an amount to you on the basis that the previous payment should not have been made. The agreement between you and the Company resulted in an obligation arising for the Company to pay an amount to you.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 109BC | Income Tax Assessment Act 1936 section 109C | Income Tax Assessment Act 1936 subsection 109C(1) | Income Tax Assessment Act 1936 section 109J