Historical context and overview

Division 7A was enacted by the Taxation Laws Amendment Act (No. 3) 1998 1 to give effect to a 1997-98 Budget announcement. The provisions of the Division replaced (but, initially, not entirely) and went much further than former s 108 of the Income Tax Amendment Act 1936 (ITAA36). Section 108 had, in one form or another, been in the ITAA36 since its enactment. It had sought to prevent the effective distribution of private company profits through the guise of advances or loans to associated persons.