Do you use business money for private purposes?

If you use money or assets from your company or trust for private purposes, it’s important to consider there may be tax consequences. You need to report these transactions correctly in the company, trust and individual tax return.

This applies for business money and assets such as:

  • salary, wages and director’s fees
  • fringe benefits and allowances
  • company dividends or trust distributions
  • loans of money or assets from a company or trust.

To ensure you get it right, take these 2 simple steps:

  • keep accurate records to account for these transactions
  • if necessary, account for the transactions in the company or trust’s tax return and your individual tax return.

By following these steps and keeping your business and private transactions separate and visible, you’ll avoid unintended tax consequences.

A record explains the tax and super-related transactions conducted by your business.

The minimum information that needs to be on the record is generally the:

  • date, amount, and character (for example, sale, purchase, wages, rental) and the relevant GST information for the transaction
  • purpose of transaction
  • relationships between parties to the transactions, if relevant.

The relevant information in your records must not be changed (for example, by using electronic sales suppression tools) and must be stored in a way that protects the information from being changed or the record from being damaged.

You need to be able to reconstruct your original data if your record-keeping system changes over time.

Remember, there are different reporting and record-keeping requirements for each type of transaction, so make sure you know how to keep accurate records for your circumstances when using your business money and assets for private purposes.

If you have questions in relation to the above, or any other matters, please do not hesitate to contact our office on 1300 620 345.

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