Joint submission on TD 2012/D1 – Division 7A - income tax, present legal obligation

The Institute, together with the other professional bodies, lodged a joint submission on Draft Taxation Determination TD 2012/D1 on 17 February 2012.

TD 2012/D1 (the draft TD) asks 'when is income tax of a private company a "present legal obligation" for the purposes of the distributable surplus calculation under subsection 109Y(2) of Division 7A of Part III of the Income Tax Assessment Act 1936?'

The submission says that the professional bodies agree with the general reasoning of the draft TD that any unpaid amount of an income tax instalment presents a ‘present legal obligation’ for the purposes of the distributable surplus calculation as at 30 June.

However, it is recommended that an additional example should be included to explain the view of the ATO regarding ‘present legal obligations’ and tax refunds.

Some other minor amendments are then identified in the submission.

Article last Updated 3 May 2012