Improving Fairness and Integrity in the Tax System - Tightening the Non-Commercial Loan Rules in Division 7A of the Income Tax Assessment Act 1936

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On 5 June 2009 the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs announced the release of a Treasury discussion paper entitled "Improving fairness and integrity in the Tax System - Tightening the non-commercial loan rules in Division 7A of the Income Tax Assessment Act 1936".

On 12 May 2009, as part of the 2009-10 Budget, the Treasurer and the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs announced that the Government would tighten the non-commercial loan rules in Division 7A of the Income Tax Assessment Act 1936 to prevent shareholders and their associates avoiding tax on distributions and benefits they receive from private companies. The measure has effect from 1 July 2009. The media release is available on the Treasurer's website (media release No. 067 of 2009).

The discussion paper outlines a range of other technical amendments to strengthen Division 7A, including changes to ensure that corporate limited partnerships cannot be used to circumvent its operation.

Details regarding the various proposals are outlined in the discussion paper.

Interested parties are invited to comment on the paper. While submissions may be lodged electronically, by post or by facsimile, electronic lodgment is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.

All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence.  Automatically generated confidentiality statements in emails do not suffice for this purpose.  Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.  A request made under the Freedom of Information Act 1982 (Commonwealth) for a submission marked 'confidential' to be made available will be determined in accordance with that Act.

Closing date for submissions: Friday, 3 July 2009

Address written submissions to:
The General Manager
Business Tax Division
The Treasury
Langton Crescent
PARKES  ACT  2600

Email:  sbtr@treasury.gov.au

For enquiries, please call Raphael Cicchini (02) 6263 3188.

Documents Available:

 Acrobat (PDF)

 Microsoft Word (RTF)

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