What happens if subdivision EA applies?
If subdivision EA applies, an amount is included, as if it were an unfranked dividend, in the assessable income of the shareholder or associate. The amount of the dividend is limited to the private company’s distributable surplus. A franking debit does not arise to the franking account of the private company. The Commissioner has a discretion to disregard a deemed if that dividend arises because of an honest mistake or inadvertent omission. This discretion, although a June 2007 amendment, applies in relation to the 2001-02 and later income years. The Commissioner may make the decision subject to specified conditions. See questions 14 to 19.
