Small Business Benefits or Taxable Concerns?

Small Business Benefits or Taxable Concerns?


As an employee in a business, often there are perks that can come with the job. A company car, fuel money, perhaps some technology to help make things easier. Small business owners however have to be a lot more mindful of how they use the money from their business.

Any money or assets that a business has earned or possesses, is solely the property of that business. That means that there are numerous issues that can arise from dipping into these company funds.

As a business owner, it’s important to keep records and correctly report transactions if using company money or assets (e.g, company car). These can include instances such as

  • taking money out of your company for yourself or your family
  • receiving money from it (for example, as a director, shareholder or an associate)
  • using your company’s assets for private purposes.

For small businesses, this can be easily done through:

  • Salary, wages or director’s fees
  • Repayments of a loan you have previously made to the company
  • A fringe benefit, such as an employee using a company car
  • Dividends (formal distribution of the profits)
  • A loan from the company

If a business does not report correctly or keep appropriate records for transactions, an unfranked deemed dividend could be included in their assessable income (this is a bad thing) during tax time.

Here are some easy ways to avoid being put into this situation:

  • Always ensure that any company money issued is accounted for as per the previous categories.
  • Have a separate bank account for the company to pay for company expenses (not private ones!)
  • Keep proper records of all company transactions
  • Repay any loans from the company before the tax return date to avoid unwanted income tax

https://iorder.com.au/publication/Download.aspx?ProdID=75273-07.2020

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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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