Explain how Div 7A operates. How is a "private company" defined for the purposes of Div 7A? Gary, an Australian resident, is the sole shareholder of MC Pty Ltd, a company incorporated in Australia. In this income year, MC Pty Ltd made an interest free loan of $80,000 to Gary. By the income year end, the company waived 30% of the loan. The balance of the loan remains outstanding by the company's lodgment date. The company's distributable surplus for the income year is $60,000. Required: Advise the tax implications of the above transaction for Gary. How will your answer be different if the shareholder of MC Pty Ltd is a wholly owned subsidiary of another company incorporated in Australia?