Contact Details
Level 1,45 Winton Rd
Joondalup WA 6027
Postal
PO Box 762
Joondalup DC WA 6919
P: 08 9301 4677
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"Winton House"
Level 1 (Unit 4), 45 Winton Road
Joondalup WA 6027 | Map

Phone: (08) 9301 4677
Email: office@barkersmith.com.au

Return to List of Tax Facts

Tax Facts - Loans to Shareholders

Advances (or loans), including the forgiving of debts, made by a private company to a shareholder (or an associate of a shareholder) are automatically deemed to be dividends, unless they come within certain specified exclusions. The deemed dividend can only apply to the unpaid present entitlement to which the private company is entitled.

If the advances are converted to a loan before the due date of the company's income tax return, the advances will not be treated as a dividend. However, this loan must be written and have a maximum term and minimum interest rate.

There is also a requirement that the shareholder make minimum repayments on the loan. If the minimum repayments are not made, a deemed dividend will arise in relation to the shortfall.