Document ID: chunk:federal_register_of_legislation:C2025C00014:section:109e:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 109E (pt 1/3)
Character Range: 934376–936890

109E  Amalgamated loan from a previous year treated as dividend if minimum repayment not made

Amalgamated loan treated as dividend in first year in which payment is less than minimum yearly repayment
 (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 made an amalgamated loan to the entity in an earlier year of income; and
 (b) the amalgamated loan is not repaid at the end of the current year; and
 (c) the amount (if any) paid to the private company during the current year in relation to the amalgamated loan falls short of the minimum yearly repayment of the amalgamated loan worked out under subsection (5) for the current year; and
 (d) section 109Q does not apply in relation to the current year.
Note: The amalgamated loan does not give rise to a dividend for that year if the minimum yearly repayment is not made and the entity satisfies the Commissioner that treating the loan as a dividend would cause hardship. See section 109Q.

Amount of dividend

 (2) The amount of the dividend is taken to be the amount of the shortfall mentioned in paragraph (1)(c), 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.

What is an amalgamated loan?
 (3) For the purposes of this Division, a private company is taken to make a loan (the amalgamated loan) to a single entity during a year of income if the private company makes one or more loans (constituent loans) to the entity during the year, each of which:
 (a) is not fully repaid before the lodgment day for the year; and
 (b) would cause the company to be taken under section 109D to pay a dividend to the entity at the end of the year, apart from section 109N; and
 (c) has the same maximum term for the purposes of that section.
The amount of the amalgamated loan is the sum of the amounts of the constituent loans that have not been repaid before the lodgment day for the year of income in which the amalgamated loan is made.
 (3A) Subsection (3B) applies if:
 (a) a private company is taken to have made an amalgamated loan (the old amalgamated loan) during a year of income (the original year of income); and
 (b) the maximum term of the old amalgamated loan under subsection 109N(3) was 7 years; and
 (c) in a later year of income (the later year of income):
 (i) a constituent loan taken account