Question: A possible deemed dividend arose from a loan account owing from the member to close corporation. Should a dividend as such be declared in the financial statements and set-off against the member`s loan account? What will the accounting entry be, for the recording of the 15% deemed dividend tax? Who is liable for what exactly in this whole scenario? Answer: I assume that the deemed dividend in this question was imposed by SARS on this loan account. If that is the case then the dividend will not have to be declared or accounted for in the records as it is purely a tax matter. The dividend tax is payable by the member/shareholder. If the CC will pay this tax on behalf of the member then the journal entry will be: Dr Loan account Cr SARS liability If the amount is then subsequently paid by the CC then he journal will be: Dr SARS liabiliy Cr Bank