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.

About Us

Backed by years of experience and knowledge in business accounting and taxation, KDA Group has grown to a team of 20 committed staff servicing the needs of clients Australia wide.

Read More >> 

Our Services

At KDA Group we aim to provide you with advice when your business needs it, not just when you ask for it.

Read more >>
Resources

We offer a range of free easy to use online resources.

View Resources >>