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Separating your Personal and Company Money

21st April 2011

There are rules which can result in you being taken to have received a dividend on payments and loans your company makes to you.  You may incur penalties and have to pay more tax if your personal and company money are not separated appropriately.  Here are some simple tips to remember;

• There can be tax implications when you make payments from a company account for private expenses.
• From 1 July 2009, check to see if there are any assets that you have used and if necessary, make a payment for the usage.
• Watch out when you make payments from a company account to an associated trust as well as to a person.
• If your company receives trust income from an associated trust, examine whether the distribution remains unpaid and if so check to see if Division 7A will apply.
• When in doubt about how to record a transaction in your accounting records ask your accountant, bookkeeper or us for advice.
• Make sure you have a complying loan agreement in place if you borrow money from your company.
• There are other exclusions regarding payments and loans that are not treated as dividends.
• Some payments may attract fringe benefits tax (FBT).

Feel free to give us a call if you require more information or check out the Australian Taxation Office website, www.ato.gov.au

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