Business Assets – Personal Use

Is there a problem with using your company’s assets for yourself? Assets that belong to your business but that are being used for your own benefit or enjoyment can potentially trigger a tax issue known as “Division 7A”.

Div 7A doing nothing

If so, then you need to keep reading….. Over the years, we have seen many business owners taking money out of their own companies – mainly because they believe it is theirs. The money is then used to purchase the family home, a new car, boat and for many other good reasons. This is not […]

Mitigating penalties on Div 7A

Introduced almost 19 years ago, Division 7A and its various exemptions apply to all private companies, their shareholders and shareholder associates across the country.  While I consider this matter an Accounting & Tax 101 function, I regularly see it applied incorrectly which is concerning when you consider the significant tax penalties it can bring. Good […]

DIVISION 7A – No obligation to repay principal on sub-trust loan

Practical Compliance Guideline (PCG) 2017/13 has been released by the ATO to deal with Division 7A UPEs under sub-trust loans which are likely to mature in the coming year. The PCG enables the conversion of a “7-year option 1 investment” sub-trust arrangement (Option 1 Loan) into a compliant loan, pursuant to section 109N of the Income Tax […]

Div 7A Traps

Division 7A Traps – Loan Repayments that are NOT Loan Repayments! Division 7A (or Div 7A for short!) is an anti-avoidance measure designed to prevent private companies from making tax-free distributions of profits to shareholders or to their associates in the form of payments, loans, forgiven debts or via the use of private company assets. […]

Simple Div 7A

If you have a company, then you have probably sat in a meeting with your accountant and heard the phrase ‘that may raise Division 7A issues’. Everyone usually then grumbles and nods wisely, and moves on… But you may be asking yourself, what is Division 7A? Glad you asked. In short, Division 7A is relevant […]

Do you have a Div 7A obligation?

Have you paid private bills from your company account? Do you owe money to your company? If you answered yes to any of the above questions then should understand how Division 7A (or “Div 7A”) works and how it affects you. When is a Div 7A loan triggered?  It is usually triggered when a payment […]

Is your Div 7A Compliant?

Division 7A of Part III of the Income Tax Assessment Act 1936 (ITAA36) is an integrity measure that was designed to prevent companies from making tax-free distributions to shareholders or their associates. This can occur where distributions of profit are disguised as loans or other transactions. This effectively allows the shareholder or their associate to […]

Ways of thinking around Div 7A

Abstract: When a private company makes a loan to a shareholder or an associate during an income year, Div 7A of the Income Tax Assessment Act 1936 (Cth) can deem the company to have paid a dividend. The dividend is assessable to that shareholder/associate. However, no deemed dividend will arise if the loan is either repaid or placed […]

Basics of Div 7A

As the owner of a private company, it’s normal – and completely legal – to borrow money from your business. However, thanks to Division 7A of the Tax Act, failing to properly record that loan could land you in some serious strife come tax time. Here’s how it works, and how to avoid its impact […]