EOFY Taxation Advice for Companies – Stellar Accounts

28 June 2017 | Business Structure, Taxation

EOFY Taxation Advice for Companies

Do you operate your business under a company structure? Looking for advice from an accountant/taxagent focused on minimising taxation obligations for companies?

Did you know that at 30 June each year you need to repay all personal drawings by the end of the taxation year?

Many small businesses get caught out by the so-called ‘deemed dividend’ rules. Under taxation law, loans and advances to private company shareholders or their associates are deemed to be taxable unfranked dividends for the shareholders. The intention of these rules is to stop the profits of private companies being distributed to shareholders as tax-free “loans”.

What to do if you have taken personal drawings out of your company?

If you have borrowed money out of the company of which you’re a shareholder, try to ensure those borrowings are repaid by the time the company’s tax return for the year is due. If that isn’t possible, declare a dividend and treat the amount as income in your own tax return, in which case, the dividend would be franked if applicable.

Alternatively, enter into a complying loan agreement, complete with commercial interest and capital payments and a defined loan period.

Don’t let this happen to you!

If the borrowed money is not repaid by 30 June, or converted into a loan, the borrowed money becomes an unfranked dividend assessable in your personal taxation return.

Call Debbie at Stellar Accounts Chermside on  0428 887 104 for assistance.  We service clients in Chermside, North Brisbane, Brisbane and Aus-Wide.

Accountant Stellar Accounts Chermside 4032