loan agreement

Division 7A ITTA 1936 (Cth) – compliance & consequences

Division 7 (sections 102V to 109ZE) of the Income Tax Assessment Act 1936 (Cth) (Tax Act) contains specific requirements for advances of moneys and loans between private companies and its shareholders or associates.  Section 109B of the Act describes three (3) classes of payments which will be deemed to be dividends: [Read more…]

Loans from Directors – can they be recalled at will?

It’s not uncommon for Directors or family members to loan money to a proprietary limited company which they are on the board of or where they are related to the major shareholders.  In most of these cases the Director is also a representative of the shareholder.  In a lot of cases, there is no express written terms of the loan and where there are multiple directors that represent all equity holders, they have all contributed funds equally.  Subsequently the question often arises as to whether or not the loan is repayable on demand. [Read more…]

Loan agreements – an overview

A loan agreement (Loan Agreement) is a formal document under which one party (Lender) advances funds to another (Borrower), subject to the Borrower’s obligation to repay that money.  In any situation involving a loan, even between friendly or related parties, it is considered best to enter into a formal Loan Agreement to protect both the Lender’s and Borrower’s interests.

Loan Agreements range from the relatively straightforward to the exceedingly complex. [Read more…]

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