Tax Facts - Loans to Shareholders

Advances (or loans), including the forgiving of debts, made by a private company to a shareholder (or an associate of a shareholder) are automatically deemed to be dividends, unless they come within certain specified exclusions. The deemed dividend can only apply to the unpaid present entitlement to which the private company is entitled.

If the advances are converted to a loan before the due date of the company's income tax return, the advances will not be treated as a dividend. However, this loan must be written and have a maximum term and minimum interest rate.

There is also a requirement that the shareholder make minimum repayments on the loan. If the minimum repayments are not made, a deemed dividend will arise in relation to the shortfall.

Business Services

We offer a wide range of services to help you run your business as effectively and as stress free as possible.

FIND OUT MORE

Specialist Services

Our specialist services include SMSF services, business acquisitions & mergers, estate planning plus many more.

FIND OUT MORE

Tax & Audit Services

Need help with GST, audit and tax returns? Our team can assist you with all your taxation and auditing needs.

FIND OUT MORE