Div 7A Loan Agreements are now being put under the Microscope by the Australian Taxation Office in an effort to identify potential Tax avoidance by company directors and shareholders. It is more important than ever to ensure business owners and directors have a formal agreement in place to negate potential tax liabilities.
So today we are going to discuss,
Loan Agreements for All Circumstances
Debt Prevention Strategies
Today we are going to look at one of our Loan Agreements and in particular, our Division 7A Loan Agreement. Now a Div 7A Loan Agreement is called a Div 7A Loan Agreement as it relates to Division 7A of Part lll of the Income Assessment Act 1936. Division 7A of Part lll of the Income Assessment Act 1936, in particular Division 7A of the Corporations Act, which allows for a business to loan money to the directors, shareholders, or associates of shareholders.
Now these loans could be done for a number of reasons but would be something arranged with the accountant of the business rather than the director themselves due to taxation liabilities. The reason we have released these Div 7A Loan Agreements is basically just to formalise them.
The ATO is now looking at these loan agreements and putting him under a microscope, and they are wanting to see a formal agreement in place between the company and its director, so it’s not viewed as a way of negating taxation. So the ATO wants to see the term of the loan, the amount of the loan, the loan payments, the loan repayment times, whether interest is being charged, etc. So really formalising these loan agreements is high priority for most businesses that use these this particular loans.
Now one of the key reasons you would use Collection Consultancy Australia or CCA to develop your Div 7A Loan Agreement is the back-office accessibility and reporting that comes with your Collection Consultancy Australia or CCA Div 7A Loan Agreement. Along with your loan agreement you also get access to your Loan Agreement Dashboard.
Now this is your very own Personal Div 7A Loan Agreement Dashboard which provides access to your loan agreement, which you can log into at any time, available 24/7. This is where you can view your loan repayments, you can see which payments have been made and which are still outstanding. Your Personal Loan Dashboard is the centre piece of your loan management functionality with various other options available.
Your Personal Div 7A Loan Agreement Dashboard is where you can adjust you Loan, you can adjust the loan amount, you can adjust the loan period, you can even top up the loan. You simply renegotiate the loan with the company. You might decide to extend the period which you can do through your Personal Loan Dashboard, a new loan would just automatically start. You can even defer payments and add additional payment onto the end of the loan, you can even forgive or cancel the loan. It is totally up to yourself.
But most importantly you can access your automated annual report which sets out the principal and interest paid over the period of the loan, which can be submitted to your accountant who can then forward to the Australian Taxation Office.
So having your own Personal Div 7A Loan Agreement Dashboard provides complete flexibility not available anywhere else.
Now the only other aspect we need to look at is the investment required by the business to establish your Div 7A Loan Agreement. Now just having a formal loan agreement in place is priceless as it ensures compliance with the ATO or Australian Taxation Office with the back-office reporting saving your accountant enormous hours in preparation. But to be clear your businesses investment is four monthly payment $250. It’s a very small investment which remember, can be a company expense which can be spread out over the life of the loan.