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 (that is, 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 have used business money or assets from a company or trust for private purposes, follow these 2 simple steps to avoid unintended tax consequences:
- Keep accurate records of the transactions.
- Account for the transactions in the company or trust tax return and your individual tax return, if applicable.
Remember, there are different reporting and record-keeping requirements for each type of transaction, so make sure you know how to keep accurate records to suit your circumstances.
You can also practise good record-keeping habits by regularly cross-checking your records against the original documents so you can fix mistakes earlier and monitor your business’s cashflow.
If you need more information refer to the factsheet Small Business: Using business money and assets on the ATO website.