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Are you using business money or assets for private purposes?

Using money or assets from your company or trust for private purposes can have tax consequences if you don’t account for these transactions correctly. That’s why it’s important to get it right.

Business money and assets you take or use for private purposes can include:

• salary and wages
• director fees
• fringe benefits, such as an employee using the company car
• dividends paid by the company to you as a shareholder (i.e. distribution of the company’s profits)
• trust distributions, if your business operates under a trust and pays you as a beneficiary
• loans from a trust or company
• ad hoc drawings or takings
• allowances or reimbursements of expenses you receive from a trust or company.

If you’ve used business money or assets from a company or trust for private purposes, you can follow these 2 steps to avoid unintended tax consequences:

• account for your transactions in the applicable company, trust or individual tax return
• keep accurate records of the transactions.

Remember, there are different reporting and record-keeping requirements for each type of transaction. It’s important to make sure you know how to keep accurate records.

You can also practise good record-keeping habits by regularly cross-checking your records against their original documentation. This allows you to fix mistakes earlier and track your business’s cashflow.

You can check these examples to make sure you’re correctly reporting business money or assets you’ve used for private purposes.

You can also complete our self-paced course on using your business money and assetsExternal Link, as part of our Essentials to strengthen your small businessExternal Link series.

If you still have questions, we encourage you to speak with a registered tax professional.

Published 12 September 2024

QC103006 – https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/what-you-need-to-know-about-using-business-money