Private companies that pay amounts of money, make loans, or forgives debts of shareholders or associates of shareholders, may be subject to Div 7A rules which are designed to ensure that income is not inappropriately sheltered at the corporate tax rate. Generally, these rules deem certain moneys and/or benefits (eg loans and forgiven debts) obtained from the private company by shareholders or their associates to be dividends. The rules around Div 7A are complex and may have become a little more so with the release a draft taxation determination from the Tax Office in relation debts forgiven. Importantly, it … Continue reading Debt forgiveness due to love and affection