Document ID: chunk:federal_register_of_legislation:C2025C00014:section:109d:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 109D (pt 1/3)
Character Range: 929827–932320

109D  Loans treated as dividends

Loans treated as dividends in year of making
 (1) A private company is taken to pay a dividend to an entity at the end of one of the private company's years of income (the current year) if:
 (a) the private company makes a loan to the entity during the current year; and
 (b) the loan is not fully repaid before the lodgment day for the current year; and
 (c) Subdivision D does not prevent the private company from being taken to pay a dividend because of the loan at the end of the current year; and
 (d) either:
 (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or
 (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time.
Note 1: Some repayments cannot be counted for the purpose of this subsection. See section 109R.
Note 2: A private company is treated as making a loan to a shareholder or shareholder's associate if an interposed entity makes a loan to the shareholder or associate. See Subdivision E.

Amount of dividend
 (1AA) The amount of the dividend taken under subsection (1) to have been paid is the amount of the loan that has not been repaid before the lodgment day for the current year, subject to section 109Y.
Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus.

Loans treated as dividends in year following that of making
 (1A) A private company is taken to pay a dividend to an entity at the end of the private company's year of income (the current year) if:
 (a) the private company made a loan to the entity during the previous year of income; and
 (b) it made the loan in the course of a winding‑up of the private company by a liquidator; and
 (c) the loan is not fully repaid by the end of the current year; and
 (d) either:
 (i) the entity is a shareholder in the private company, or an associate of such a shareholder, when the loan is made; or
 (ii) a reasonable person would conclude (having regard to all the circumstances) that the loan is made because the entity has been such a shareholder or associate at some time.
Subdivision D (other than section 109R) does not apply to loans covered by this subsection.

Amount of dividend
 (2) The amount of the dividend taken under subsection (1A) to have been paid is the amount of the