Home – New Forums Money matters Directors loan from Company

  • This topic is empty.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • #987860
    Solo_Again
    Member
    • Total posts: 3
    Up
    0
    ::

    Hi,
    As a director of a small company, I did draw some money from the company as a loan. This loan account will not be fully paid back by the end of the financial year and it has been suggested that the outstanding balance at 30 June is treated as income to me and taxable as personal income? Can somebody clarify if this is correct as I would make some changes to minimize my personal tax.

    Thanks,

    #1164625
    Simply Money Honey
    Member
    • Total posts: 78
    Up
    0
    ::

    Hi Solo Again

    There is income tax legislation referred to as Division 7A which prevents companies making loans to shareholders. These loans are usually treated as dividends to ensure the appropriate tax is paid.

    You will need to speak to an accountant or tax advisor to get specific advise in relation to your situation but I have included a link below to the tax office’s Divison 7A fact sheets to give you additional information.

    https://www.ato.gov.au/Business/Division-7A/In-detail/Fact-sheets/Division-7A—loans-by-private-companies/

    Kind regards

    Gabrielle

    #1164626
    Solo_Again
    Member
    • Total posts: 3
    Up
    0
    ::

    Thanks Gabrielle,
    Explains why I could not find where to account for the loan in personal income. It is to be treated as Dividend payment.

Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.