There are multiple ways in which owners may access private company money, such as through salary and wages, dividends, or complying Division 7A loans. Division 7A is an area where we see many errors, across both the basics and the more complex aspects.
This year, working in partnership with your professional associations, we'll be raising awareness of these issues. We aim to support you and your clients manage their obligations when receiving payments and benefits from their private companies. We’ll be sharing information through our communication channels and at events. We’ll also be participating in speaking opportunities with your professional associations.
We’ll start by focusing on the basics. These tend to lead to the common errors and issues we see. For example, business owners need to:
- keep adequate records
- properly account for and report payments and use of company assets by shareholders and associates
- comply with rules around Division 7A loans.
It’s essential you and your clients understand Division 7A in order to:
- make informed decisions when receiving private company money and using private company assets
- avoid unexpected and undesirable tax consequences.
Our recent webinarExternal Link discusses these common mistakes and how they can be avoided. You and your clients can use our Private company benefits – Division 7A dividends information to understand and comply with the associated tax obligations.