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Use of company assets
As expected, the deemed dividend rules (Division 7A) have been extended to the private use of company assets. This may include the use of company assets such as a:
- private residence;
- holiday home;
- boat;
- artwork
- cars (unless provided as an employee fringe benefit)
The new legislation only applies to assets owned by companies. In broad terms, a deemed unfranked dividend would arise to the extent that market rental is not paid for the use of company assets. There are important exclusions for private residences connected with farms or businesses.
While the new legislation does not deal with private assets owned by trusts, the ATO is effectively targeting these private assets through its revised interpretation of the existing deemed dividend rules. The Commissioner of Taxation has publicly cited the purchase of luxury yachts by trusts as justification for the ATO attack on trusts and corporate beneficiaries.
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