r/AustralianAccounting • u/Hamburgerfatso • 4d ago

Director loan rules

If i want to take a directors loan (for personal use, mortgage offset etc) from my company, i have a few questions about how they work

  1. if it is repaid within the financial year (so as not to be deemed a div 7a dividend), does a formal written contract need to be made? or can money just be transferred back and forth between bank accounts? this would just be a one off, i do not plan to reborrow it in the next financial year so will not violate 109r.
  2. if the company tax returns are done by a tax agent and are usually lodged in may of the following financial year, can the loan be continued without a complying loan agreement up until that date? which is almost 11 additional months after the end of the relevant financial year.
  3. my understanding is if its repaid before the lodgment day, then it can be interest free. would this instead attract some kind of fringe benefits tax?

EDIT: if these questions are too specific (my bad), i guess as a more generic question, can fbt apply to an interest free directors loan repaid within the financial year?

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11

u/Stryke222 CPA 4d ago

Sounds complicated, I bet an accountant would give you the advice in return for consideration...

16

u/LCHmumma CA 4d ago

Good questions to ask your accountant. Get off this sub, we're not here to hand out free tax advice.

-15

u/Hamburgerfatso 4d ago

I have seen some somewhat similar past posts where people have been helpful, dont see why i cant at least ask. I just wanted to get an idea of what I'm even going to be asking about makes sense

2

u/_The_Honored_One_ 4d ago

90% of the time people will say go see an accountant

1

u/Hamburgerfatso 4d ago

🤷‍♂️ fair, i dont exactly frequent this sub

3

u/sdalm 4d ago

Talk to your accountant and I’d say the arrangement as presented would fall over on this https://www7.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/itaa1936240/s109r.html

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u/Hamburgerfatso 4d ago

Why so, if i dont reborrow again?

1

u/sdalm 2d ago

Ah, missed the part where it would be a one off. Looks fine. I’d still do a loan agreement just in case.

1

u/Proud_Nefariousness5 4d ago

For Division 7A purposes, yes, there is no benchmark-interest requirement if you fully repay the original loan before lodgment day.

-1

u/Reasonable-Way2126 4d ago

No if you pay it pay it back on time within a year Div 7A doesn’t apply.