Your company is a separate legal entity from you as a director or shareholder. The money your business earns and its assets belong to the company.
This means it’s important to keep appropriate records and correctly report transactions if you use company money or assets. This includes if you:
- take money out of your company for yourself or your family
- receive money from it (for example, as a director, shareholder or an associate)
- use your company’s assets for private purposes.
For example, you may do it through:
- salary, wages or director’s fees
- repayments of a loan you have previously made to the company
- a fringe benefit, such an employee using a company car
- a loan from the company.
Not correctly reporting and keeping appropriate records for transactions can result in an unfranked deemed dividend being included in your assessable income.
If you realise that you’re not correctly reporting these transactions or keeping appropriate records, talk to a registered tax professional and make sure that you correctly report the use of company money or assets in your next tax return.
If you have made a mistake or left something out of your previous tax returns, you can lodge an amendment.
If you need any help with anything related to accounting and taxation, give our team at SPS Business Consultants a call on (03) 9904 9261.