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Div 7A - Franked Dividend to cover minimum repayment

Devotee

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Hi , Pls assist me on this.

 

A private company has a receivable (  loan) from a partnership. The directors of the company are the partners (also sharehoders of the company). I assume this is Div 7A then. In order to cover the minimum repayment CAN the company declare a franked dividend to partnership so that franked benefits (credits) flow into directors when partnership distribution is made.The partnership it self is not a shareholder of the company. I

 

f there is a specifc ATO line pls mention the no as sometime back when i called ATO the service agent told me tthat " Div 7A questions are not supported from ATO line".

 

Any thoughts are appreciated,

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Taxicorn Registered Tax Practitioner

Replies 4

I assume this is Div 7A then. In order to cover the minimum repayment CAN the company declare a franked dividend to partnership so that franked benefits (credits) flow into directors when partnership distribution is made.The partnership it self is not a shareholder of the company.

 

Dividends can only be paid to shareholders  -  Corporations law.

But the shareholders could lend then lend to the partnership to allow it to meet the min payment.

 

 

 

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Most helpful response

Taxicorn Registered Tax Practitioner

Replies 4

I assume this is Div 7A then. In order to cover the minimum repayment CAN the company declare a franked dividend to partnership so that franked benefits (credits) flow into directors when partnership distribution is made.The partnership it self is not a shareholder of the company.

 

Dividends can only be paid to shareholders  -  Corporations law.

But the shareholders could lend then lend to the partnership to allow it to meet the min payment.

 

 

 

Devotee

Replies 3

@Bruce4Tax  Thank you

Devotee

Replies 2

@Bruce4Tax  Hi one last thing , if a deemed dividend is to paid by the company can it be declared for the partnership as it is the one who have borrowed from the company.

Taxicorn Registered Tax Practitioner

Replies 1

if a deemed dividend is to paid by the company can it be declared for the partnership as it is the one who have borrowed from the company.

 

Look at you annual review form sent by ASIC each year  -  it shows who is a shareholder.

 

Dividends can only be declared for shareholders  -  nothing to do with div 7A loans.

 

 

Devotee

Replies 0

@Bruce4Tax  Thanks a lot