Small Business – Division 7A – What happens when I owe my company money?

There are many ways directors and shareholders can access private company money, such as through salary and wages, dividends, or complying Division 7A loans.

Recently the ATO flagged that Division 7A is an area where they see many errors and are raising awareness of the issues.

Not getting the basics right tends to lead to common errors and issues;

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 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 team are on hand to answer any questions you may have about money you pay to yourself from your company money.

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