ato logo

Non-share capital account

Last updated 15 April 2018


Assume a controlling shareholder has made an undocumented $50,000 connected entity ‘at call loan’ to a company on 1 July 1997, on the understanding that interest may be paid on the loan from time to time. The company’s annual turnover exceeds the maximum allowable under the small business carve-out test, and the loan is a non-share equity interest of the company (for an explanation of the application of the debt/equity rules to connected entity at call loans, refer to the guide to ‘at call loans’).

The company has a non-share capital account. It will be credited with the value of the at call loan to account for the equity interest. Its non-share capital account will be debited with the amount of any repayments the company makes after 1 July 2005.

Assume the company repays $10,000 to the shareholder on 1 January 2006. It will debit its non-share capital account for $10,000.

The transactions above are illustrated in the following non-share capital account:

Non share capital account

End of example

Primary legislative references

What next?