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What this Practice Statement is about

Exercising the discretion on behalf of the Commissioner

When to consider the discretion

Prerequisite for the discretion to be considered

Steps after identifying that the prerequisites are met

Whether Division 7A was triggered because of an honest mistake or inadvertent omission

If there is insufficient evidence to establish the cause of the trigger

Mistakes and omissions that may result in Division 7A being triggered

Mistake or omission examples

Facts and circumstances to take into account in determining whether a mistake was honest or an omission inadvertent

Relevant facts and circumstances that support honest mistake or inadvertent omission

Relevant facts and circumstances that weigh against honest mistake or inadvertent omission

If the transaction was intended to avoid the application of Division 7A

If the entity has relied on professional advice

If the entity has not obtained professional advice

If the trigger is the result of a lack of knowledge of Division 7A

If the trigger for Division 7A was a common kind of mistake or practice

Evidence to consider

How to deal with undocumented assertions

If there is incomplete or conflicting evidence

Whether to exercise the Commissioner's discretion

Considerations in making a decision whether to exercise the discretion

Circumstances in which the mistake or omission was made

Extent of corrective action and when it should be taken

Instances where Division 7A has been triggered previously

Any other relevant matters

Making a decision to either disregard a deemed dividend or allow it to be franked

Factors to consider when disregarding the dividend or allowing it to be franked

Whether to exercise the discretion subject to a condition

A reasonable time to require the corrective action be taken

Review rights in respect of a decision made under section 109RB

Whether to refer the tax agent to the Tax Practitioners Board

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