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Distributable surplus for Div 7A: Calculations and Application

Recorded 26 March 2026. Mistakes are often made when calculating distributable surplus and myths surround the impact that the rules have on client tax positions. This session aims to address these common problem areas.

Avoid costly mistakes with Division 7A. Learn how to correctly apply the distributable surplus rules, bust common myths, and protect your clients from unexpected tax consequences.

Recorded 26 March 2026

The integrity rules in Division 7A are aimed at ensuring there are tax consequences when funds or profits that really belong to a private company are accessed by shareholders or their associates. When the rules are triggered, a shareholder or their associate may need to recognise a deemed unfranked dividend in their tax return. This deemed dividend, however, is capped at the company’s distributable surplus.

Our experience tells us that practitioners often struggle when applying the distributable surplus rules to real-life client scenarios. Mistakes are often made when calculating distributable surplus and myths surround the impact that the rules have on client tax positions. This session aims to address these common problem areas.

Total 1.25 CPD Hours

On completion, participants will be able to:

Work through the process of calculating the distributable surplus of a company for Division 7A purposes;
Understand the figures that should be used for assets and liabilities in the net assets item of the formula;
Understand when the Commissioner might decide to substitute different values;
Identify items that are treated as “Division 7A amounts”; and
Explain what happens in the situation where a deemed dividend is reduced by the distributable surplus rules.

Tim Edgecombe

Tim has over 15 years’ experience in public practice with Chartered Accounting firms, including with Big 4 firms and continues to act as a consultant for several accounting firms, ranging from large second tier to sole practitioners. Tim has significant experience in the tax issues encountered by small to medium enterprises and brings these practical insights to training presentations.

He regularly presents tax related topics at a range of professional forums on behalf of other industry bodies. Tim is also involved with the presentation of Tax Masterclass material for CA candidates.