A friend’s accountant suggested that they could reduce interest on non-deductible debt by using company cash to offset their personal
mortgage, then transferring the cash back by 30 June. Is this an acceptable strategy?
This might initially sound like a brilliant strategy but what is really happening is that you are using company funds to derive a personal
benefit. Doing this once might not attract attention, but doing this more than once might trigger a deemed unfranked dividend under Division
7A. Section 109R is designed for scenarios like this.
If this occurs, the repayment you made will be ignored, meaning that a deemed dividend could be triggered in relation to the funds
initially borrowed from the company unless a complying loan agreement is put in place, in which case minimum loan repayments would need
to be made to prevent a deemed dividend from arising.
For example, let's assume you are a shareholder of the company (or an associate of a shareholder) and you borrow money from the company on 1
July 2022. This loan would generally fall within the scope of Division 7A, but a deemed dividend can be avoided if the loan is fully repaid
by the earlier of the due date and actual lodgement date of the company's 2023 tax return.
However, if you repay the loan but it appears that you intend to borrow a similar or larger amount from the company when making the
repayment then the repayment can be ignored. The main exception to this is where the repayment is made in a way that is taxable to the
individual (e.g., dividends or directors’ fees are set-off against the loan balance).
One of the most common situations where section 109R could apply is where funds are taken from the company bank account and placed into a
director's home loan offset account.
Even if the funds are transferred back to the company before the end of the year, there is a significant risk of section 109R applying if the pattern repeats. That is, the money will be treated as a dividend and taxed as assessable income.
Give us a call or email if you'd like help to understand what this means for you and your business.
During COVID, listings were tight and demand remained strong. As interest rates started to climb, some of the demand started falling away, however, listings didn’t rise.
With higher interest rates many buyers are looking at creative ways to boost their rental income. One popular strategy is building an extra dwelling – like a granny flat
Despite interest rates rising at a record pace, the number of mortgage holders in arrears remains around the long-term average of 1%.
The move toward mortgage brokers and away from direct lenders by borrowers is continuing to increase.
For most people, a car loan is often the second largest household expense and it’s one that can cost a lot more these days with the high price of new cars.
ONLINE WEBINAR
27 July 2023 // 12:30-1:30pm
(ESG) considerations have become increasingly important for investors as they look to make investment decisions that align with their values
and have a positive impact on the world.
One solution used by many businesses is to lease the equipment. By choosing to lease, businesses can spread out the cost of the equipment over several years through manageable monthly payments
Off-market normally just means that the property is sold without it ever being listed. This can be with the help of an agent, or privately.
When it comes to negotiating, there are some things you can do to make the process more transparent and easier. For the most part, it comes down to being prepared.
On 1 July 2023, award rates of pay and the National Minimum Wage increased by 5.75%.
With inflation still remaining high and continuing to increase the official cash rate, borrowers should consider returning to fixed rate loan products.
Industrial property market has seen the vacancy rate hit another new record low despite projections of a surge in supply.
The digital games and interactive entertainment sector is the largest creative sector in the world and one of the fastest growing industries worldwide.
Office assets were considered a premium commercial investment choice, with high demand from offshore buyers.
The 120% skills and training, and technology costs deduction for small and medium business have passed Parliament.
Investors remained focused on the release of inflation data and how ongoing pricing pressures might affect monetary policy settings in key regions.
Bianca Carroll's dedication and commitment to excellence have culminated in her being recognized as the Emerging Adviser of the Year, a remarkable accomplishment that is a testament to her perseverance.
ONLINE WEBINAR
21 June 2023 // 12:30-1:30pm
Many people believe that if they have a valid Will they also have
an estate plan, but this is not so. While a Will outlines where the deceased individual's assets will be distributed, it does not
include various other documents and directives that are available.
In a recent Harvard Study on the key ingredients to happiness, while extreme wealth won’t buy you happiness, having financial security can help you avoid stress and solve problems faster.
Compounding is an extremely effective investing tool, says Morningstar Investment Management’s Head of Institutional Portfolio Management and Solutions, Jody Fitzgerald, but it’s important to be aware of its inverse power on the downside.
With a few weeks left until the end of the financial year, it's time to optimize our SMSF or other super funds and maximize available strategies.
Young investors in their 20s and 30s possess a valuable asset for investing.
Over the past few years, service stations have been a favoured investment option.
Industrial property is putting upward pressure on rents, according to a new report from Savills
As EOFY approaches, it's important that Australian businesses prepare for their tax responsibilities and reassess their financial strategies.
One of the most common mistakes when refinancing a car loan is to ignore your credit score.
A pre-approval is simply a lender indicating they’d be willing to loan a certain amount to a potential buyer. However, it's important to remember that a pre-approval is not a guaranteed loan.
With the cost of living surging, many Australians likely wish their mortgage was already paid off.
Upside Realty found a significant increase in open home attendance across Victoria, New South Wales and Queensland.
The end of the financial year is always a busy time for property investors, however, with the right preparation you can make the most of your available deductions.
SMEs face new challenges and opportunities with the ESG trend. This article offers a balanced breakdown of ESG, its varying perspectives, implications for SMEs, and the pros and cons.
Recently, Fair Work legislation has been amended in a number of areas and if you’re a business owner with employees, you should be across these.
When considering a mortgage, it's advisable to research different lenders and their product offerings to determine if they provide offset accounts as an option.
Several costs come with refinancing a home loan, although some of these costs are added to your new mortgage. You can get a rough estimate of the cost to refinance your mortgage by using a refinance calculator, or engaging a mortgage broker.
On settlement day, it's important to consider tasks such as reviewing the final settlement statement, ensuring funds are available for the down payment and closing costs, and conducting a final inspection of the property before completing the purchase.
A reverse mortgage is a type of loan that allows homeowners who are typically 62 years or older to convert a portion of their home equity into cash.
Mortgage refinancing is the process of replacing an existing mortgage with a new loan, typically to secure better terms, lower interest rates, or access equity in the property.
Lenders Mortgage Insurance (LMI) is a form of insurance that protects the lender in case a borrower defaults on their home loan, typically required when the borrower's deposit is less than 20% of the property's value.
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Construction loans are a type of financing specifically designed to fund the construction or renovation of a property, providing borrowers with the necessary funds in stages as the construction progresses.
When preparing to buy a property, it's important to assess your financial readiness, research the real estate market, determine your needs and preferences, and secure financing options.
Family guarantee
When buying a first home, it's crucial to consider factors such as budget, location, property condition, future needs, and financing options.
When buying a house at auction, one should consider factors such as conducting thorough research on the property's condition, setting a budget limit, assessing potential renovation costs, and understanding the terms
Tax planning is more than just a financial necessity—it's a strategic advantage for businesses of all sizes. By proactively managing your tax strategy, you can significantly reduce your liabilities, enhance cash flow, and ensure full compliance with ever-evolving tax regulations.
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