Clear separation of business and private assets

Business owners sometimes use business funds or assets for private purposes without repaying or accounting for them correctly. Such transactions may be treated as assessable income of the owner (or associate).

When starting a business, put systems in place to ensure accurate tracking and recording of private expenses and use of business assets. The tax rules relating to private use of company assets can be complex. Consider seeking advice to make sure you're meeting your obligations.

Ensure stakeholders have sufficient knowledge and experience to understand the proper use of business assets and seek advice before making personal use of business assets (including cash) to clarify the tax implications (relating to FBT or deductibility, for example).

For private companies, consider the tax treatment of any payments, loans, or other benefits provided to shareholders or their associates. If necessary, ensure loan agreements are in place, correct valuations are made and source documents are kept. Seek advice from an adviser or the ATO where necessary.

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Last modified: 31 May 2016QC 49167