CA ANZ Advanced Tax (Australia) Practice Questions - CA Program Elective Advanced Tax (Australia) Exam

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A private company makes a loan to a shareholder during the year and does not put it on a complying loan agreement before the lodgment day. What is the primary Division 7A consequence?

The loan is automatically forgiven and the company claims a deduction The shareholder is taken to receive an unfranked deemed dividend up to the company's distributable surplus The company must pay fringe benefits tax on the loan amount The loan is rolled over tax-free into the next income year

Correct Answer:

The shareholder is taken to receive an unfranked deemed dividend up to the company's distributable surplus

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