Is a private company’s income tax properly payable for an income year but unpaid at the end of that income year included in the calculation of distributable surplus as a present legal obligation?
Yes. a private company’s income tax properly payable for an income year but unpaid at the end of that income year is included in the calculation of distributable surplus as a present legal obligation. 110. Where an amount is taken to be a dividend under Division 7A but is reduced to nil as the private company has a nil distributable surplus, can the amount be treated as a dividend in a future income year when there is a distributable surplus? No. An amount is taken to be a dividend under Division 7A at the end of the private company’s income year. Therefore, if the amount taken to be a dividend is reduced to nil because there is a nil distributable surplus, the amount cannot be treated as a dividend in a future income year. (See subsections 109C(1), 109D(1), 109E(1), 109F(1) and 109Y(1).
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