Make company startup costs deductible with LOC?

Hi,

I have searched the forum without any luck.

I am in the process of setting up a company as a side project to my current job. As there are costs in doing so, I want to be able to make these costs deductible from Day 1. Things like accountant fees, lawyers, etc etc.

As I'd prefer to not use any of my own post-tax money to do so, can I get a LOC and pay for everything for this new company?

Cheers
 
Yes you can use a LOC, but you have to consider who can claim the costs. s 8-1 allows deductions if the expense is incurred in the production of assessable income.
 
you wouldn't receive a deduction. could on-lend the money to the company and company gets the interest deduction. must be properly documented and a commercial arrangement.
 
Get the company to reimburse you after it is formed.

This is permitted by corporations law (if done properly).

The company may be able to deduct the capital cost of formation over five years and perhaps the interest expense immediately.

All this may be impacted by non-commercial business loss limitations or the PSI rules.

Lots of specialist advice needed.
 
Get the company to reimburse you after it is formed.

This is permitted by corporations law (if done properly).

The company may be able to deduct the capital cost of formation over five years and perhaps the interest expense immediately.

All this may be impacted by non-commercial business loss limitations or the PSI rules.

Lots of specialist advice needed.

Yes, this is the idea. Say in costs us $10K to set up the company in legals etc. 3 months later we start getting income. The idea is we get a LOC for 15K to pay for the initial $10K and have 5K spare for other expenses in the mean time, compounding the interest. First 15K income, can clear the LOC.

That way we are using company income for company start up costs. Leaving our own income from current jobs and keeping everything completely separate.
 
I probably worded this wrong. The idea is to use a LOC to pay for the company setup costs rather then our own money. And then repay this LOC with the companies income.

I'm not talking about making the costs deductible against our current personal tax.

If that makes sense?
 
I probably worded this wrong. The idea is to use a LOC to pay for the company setup costs rather then our own money. And then repay this LOC with the companies income.

I'm not talking about making the costs deductible against our current personal tax.

If that makes sense?

Yes, makes sense. But $15k for a company set up is a bit high! I charge $1100 with legal advice and ASIC fees included.
 
Top