When will a private company dividend be NALI? (continues)
- Whether shares have been issued in satisfaction of a dividend and the circumstances of issue
A private company dividend will not be considered NALI just because shares have been issued in satisfaction of a dividend. However, the circumstances of the issue need to be considered to determine whether the issue of the shares is consistent with an arm's length outcome. If the private company has issued bonus shares to all of its shareholders on the same basis, the issue of bonus shares will be a neutral factor in making the determination.
- Other matters that the Commissioner considers relevant
Pursuant to S.295-550(3)(f), “any relevant matters” can be taken into account when deciding whether a private company dividend is consistent with an arm’s length dealing (such that the dividend is not treated as NALI).
According to the ATO in TR 2006/7, the matters that may be considered relevant include:
— the extent to which members who are at arm's length to the private company have an interest in the superannuation fund;
— the relationship between the superannuation fund and the private company;
— the relationship between the superannuation fund and any party with which the private company has dealings;
— who the superannuation fund acquires the shares from and the circumstances of that acquisition; and
— the rate of return on the superannuation fund's investment.