Separating business and personal expenses

Christine Town • August 1, 2025

When you’ve poured your energy into building a business from the ground up - celebrating milestones, weathering challenges, and investing personal time and money - it’s easy to feel like the company is an extension of yourself. After all, it probably reflects your values, your efforts, and your long-term goals.

That’s why moments of overlap can seem harmless. Maybe you use the business card to cover a personal bill, thinking you’ll sort it out later, or you take the company vehicle for a weekend getaway.


But the tax office sees your business quite differently: as its own legal entity, with its own rules and responsibilities. And crossing the line, even unintentionally, can lead to complications that are better avoided.


Imagine someone who runs a thriving small business. They’re the sole director in the company that owns the business. After years of hard work, the business owner books a long overdue personal holiday and charges it to the business credit card. They plan to reimburse the company but with tight deadlines and tax time approaching, the repayment slips their mind.


When the business owner lodges the company’s tax return, that innocent transaction hasn’t been dealt with properly. According to Division 7A of the tax law, the payment could be treated as personal income and taxed at the business owner’s individual marginal rate. It’s known as an unfranked dividend.i


Division 7A exists to ensure that shareholders (and their associates, like family members or business partners) don’t use company funds in ways that sidestep formal dividend payments. If money is withdrawn or business assets are used privately without the correct documentation - such as loan agreements or reimbursement records - the ATO may step in and reclassify those transactions as income. The result? Unexpected tax bills and a lot of stress.ii


What counts as private use?

It’s not just about major purchases. Even small , recurring habits can raise red flags. For example:


  • Paying for groceries or rent from your business bank account
  • Using company tools, vehicles or property for personal reasons
  • Lending money to a relative from the company’s reserves
  • Failing to create a loan agreement when borrowing from your business


If the money isn't repaid or formalised before lodgement day, these amounts may be treated as Division 7A dividends, even if the spending was accidental.


Borrowing money without a complying loan agreement, or simply taking the money and failing to declare it, can also lead to major tax headaches.


Fringe benefits and private use of assets

Let’s say you occasionally drive the company car to drop the kids at sport or to pop down to the local hardware store on weekends. It seems harmless but unless it’s documented correctly, it could attract Fringe Benefits Tax (FBT).iii


Businesses must:

  • declare private usage in their annual FBT return
  • keep records of reimbursements and expenses
  • ensure that any benefits are correctly valued and disclosed


FBT might feel like one more thing to worry about, but it can also work in your favour. Businesses may claim GST credits and tax deductions related to fringe benefits, provided everything is above board.


Practical tips to stay on track

If you do use business money or assets for personal purposes, recordkeeping becomes your best ally. Here’s what that might look like:


  • Create clear loan agreements between the right entities
  • Avoid journal entries that falsely suggest repayments
  • Don’t borrow company funds to repay previous Division 7A loans
  • Ensure loan repayments meet the benchmark interest rate set by the ATO
  • Declare all interest earned by the company as part of its assessable income
  • Include relevant transactions in the tax returns of both the company and the person receiving any benefit.


Resources to help

While the rules are firm, the ATO does offer resources to make them more manageable. The ATO has a number of webinars explaining common issues surrounding the Division 7A rules, plus a Division 7A repayment calculator and decision tool.


Small business owners can also take a short online education courseoutlining the rules for using business money and assets.


If you’re unsure whether a past transaction needs correcting, or you want to make sure your systems are set up properly for the future, we’re here to help. An early conversation now could prevent a last-minute panic when tax time rolls around.


i Managing Division 7A risks, and corrective action | Australian Taxation Office

ii Tax treatment of Division 7A dividends | Australian Taxation Office

iii Fringe benefits tax (FBT) | Australian Taxation Office

Do you know how your super is performing?

By Nikki Ashurst • November 2, 2026
Many Australians don't know how their super fund has performed or what it invests in. Are you one of them? Here's what to check and why it matters. Do you know how your super fund performed over the last two years? Many Australians don’t and are working towards their financial future without fully understanding one of their most important assets and without a clear plan for how their super may support them in retirement. That's not surprising, as many people view super as something that should run quietly in the background while they're busy with careers, families and everything else that life throws at them. But when you’re not sure what’s happening behind your balance, it’s harder to know whether you’re on track, whether your current approach reflects your goals or what opportunities might be available to help you make the most of what you’ve built so far. Your super isn't sitting in an account, it's invested Super is invested by a fund on your behalf across a mix of assets, with those investments working to grow your balance over time. Those include: Shares Ownership in Australian and international publicly listed companies. Their value can rise and fall, sometimes substantially over short periods but shares can provide capital growth over the long term. Property and infrastructure Real assets like office buildings, shopping centres, airports and energy networks. They can produce income and don't always behave in the same way as share markets, helping diversify investment holdings. Fixed interest and bonds Lending to governments and companies in return for interest. They can provide regular income and be steadier than shares, although returns and risk vary depending on the investment. Cash Generally, the most stable and lowest risk investment type. It can provide stability and faster access to money but typically offers lower longer term return potential. The investment option you choose determines the mix of assets held in your super based on your risk appetite. Most super funds offer options from conservative to high growth. If you’re young, a growth option with a higher exposure to growth assets like shares could offer higher returns over time – but it also comes with higher risk. As retirement nears, you might want to consider a more conservative approach with more defensive assets, like bonds for example to protect your savings. If you've never made a choice, you're probably in your fund's default option, which is designed to suit a broad membership. It’s worth knowing whether the mix you're in matches your circumstances and goals, including how far you are from retirement. Why performance alone is not a true comparison If you're thinking about how your super compares, returns are often where people start. The trouble is that a return figure means nothing without context: What it's being compared to Growth and conservative options invest differently and with different levels of risk. Compare like with like or the comparison may not be genuine. The comparison period A single year can be heavily influenced by short term market conditions. Super is measured in decades, so five, seven and ten year returns tell you far more about whether a fund is consistently doing its job, albeit not a predictor of future performance. Fees and tax Published returns should reflect investment fees, costs and tax but administration fees may be charged separately from your balance. Two funds quoting the same return can leave you in meaningfully different places once all fees are accounted for. Then there are the things that returns can't show you at all. For example, what insurance is attached to your account and what it's costing you, whether the fund offers guidance, tools and advice or simply sends a statement once a year. Another consideration maybe the level of support available when you need it. When comparing funds, it's worth looking at the full picture, including performance, fees, investment options, retirement support and member benefits. What today’s decisions mean tomorrow To understand how your super stacks up, start here: Find your investment option It's on your annual statement and in your online account. Look at what's in it Your fund publishes the asset allocation (shares, cash etc.) for each investment option. Check the long-term return for that option Focus on five and ten year returns, not just last year and compare them with equivalent options. Understand the total cost Add together administration fees, investment fees and insurance premiums as an annual dollar figure. Comparing super is about working out which option will perform best for you. Before you jump in, it’s worth understanding what's behind the numbers so you can make decisions based on more than a headline return. Knowing where you stand is the first step A super balance tells you where you are today. Understanding how your super is invested, how it compares and whether it's aligned with your goals helps show whether you're heading in the right direction. Source: MLC The information in this article does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Capstone Financial Planning nor their directors, employees or authorised representatives gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document. Principal Wealth Management Pty Ltd trading as BMO Financial Solutions ABN 53 109 336 601 is a Corporate Authorised Representative (CAR 277821) of Capstone Financial Planning Pty Ltd ABN 24 093 733 969 Australian Financial Services Licence (AFSL) No. 223135.

The SMSF landscape is changing

By Jude Schofield • October 7, 2026
More Australians are choosing to take direct control of their retirement savings by establishing a self-managed super fund (SMSF) and according to the SMSF Association, Aussies now see their super as an important part of building and managing their overall wealth.