Know your private company loan arrangements before you lodge

We advise taxpayers that, if you or an associate take a loan from their private company, you should not forget the requirements of repaying a private company loan for income tax purposes.  Otherwise, you could find the loan treated as a Division 7A deemed dividend and included in your, or your associates', assessable income.

Taxpayers should consider the following in particular before lodging their private company tax return:

  • ensure the loan is a Division 7A complying loan and make minimum yearly repayments; and
  • you cannot borrow further money or assets from the same company, directly or indirectly, to make minimum yearly repayments or repay the loan – if you do, these payments may not be taken into account and could result in an assessable deemed dividend.

We encourages taxpayers to check your loan repayments and, if you are concerned a payment will not be taken into account, speak to us.

 Please contact our office if you require assistance in relation to your loan arrangements.

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