Interesting and potentially disturbing article in Herald Sun money section Monday:
The thrust of the article suggested that if a shareholder loans his own company interest free money then repays the loan, the repayment will be treated as a dividend payment.
Could this mean that if I used equity from my home (or cash etc) as a loan to the company trustee of my family trust for a property deposit, then wanted it paid back to me later, that it would constitute a taxable dividend? Would I then have to charge my trustee company loan interest to avoid this - with the interest obviously adding to my personal tax liabilty.
I would appreciate the views of anybody who has more in depth knowledge of this new law and it's potential implications (Dale maybe??).
Bill
Does anybody have more in depth info on this? Tried to search on the ATO site for any further reference but no luck so far.Herald Sun , 16-12-02 , Ed: 1 - FIRST , Pg: 050 , 119 words , MONEY
FAMILY businesses will be adversely impacted by new tax laws that come into effect on January 1. The new laws, known as the debt-equity rules, will apply to most loans made by shareholders to their own private company. Under these rules when a company repays that loan it will be taxed as a dividend in the shareholders hands.
The thrust of the article suggested that if a shareholder loans his own company interest free money then repays the loan, the repayment will be treated as a dividend payment.
Could this mean that if I used equity from my home (or cash etc) as a loan to the company trustee of my family trust for a property deposit, then wanted it paid back to me later, that it would constitute a taxable dividend? Would I then have to charge my trustee company loan interest to avoid this - with the interest obviously adding to my personal tax liabilty.
I would appreciate the views of anybody who has more in depth knowledge of this new law and it's potential implications (Dale maybe??).
Bill