Advise the tax implications of the above transaction for Y. How will your answer be different if the shareholder of ABC Pty Ltd is a wholly owned subsidiary of another company incorporated in Australia?
Advise the tax implications of the above transaction for Y. How will your answer be different if the shareholder of ABC Pty Ltd is a wholly owned subsidiary of another company incorporated in Australia?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter16: Multijurisdictional Taxation
Section: Chapter Questions
Problem 1CE
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Question
Y, an Australian resident, is the sole shareholder of ABC Pty Ltd, an Australian resident company. In this income year, ABC Pty Ltd made an interest free loan of $100,000 to Y. By the income year end, the company waived 40% of the loan. The balance of the loan remains outstanding by the company’s lodgement date. The company’s distributable surplus for the income year is $50,000. Advise the tax implications of the above transaction for Y. How will your answer be different if the shareholder of ABC Pty Ltd is a wholly owned subsidiary of another company incorporated in Australia? Provide examples.
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