15 August 2023
7:30 AM - 9:00 AM
1.50 CPD hours
The challenge of providing sufficient working capital to small business can be demanding from a tax perspective particularly for small businesses with a need for a high level of working capital.
The management of these arrangements while they remain in place must be undertaken with due consideration of the relevant tax rules while the unwinding of those arrangements may give rise to substantial tax issues. This session will look at the following sources of working capital including;
- External financiers (banks)
- Loans from business owners and parties associated with business owners (including family members providing loans and guarantees to the small business)
- Retention of unpaid present entitlement (UPE) of companies (pre-2009 loans)
- Loaning back UPEs of private companies to trusts on complying terms post-2009 (Division 7A)
- UPEs of adult beneficiaries that now must be managed with reference to s 100A ITAA36
- Partners leaving their entitlement to profit in a partnership; and
- Using retained profits in a company to pay back loans to the company from family members rather than paying dividends.
This session will also explore in detail the tax issues associated with ensuring compliance with relevant tax rules with particular reference to a range of tax concerns (commercial debt forgiveness, Division 7A and capital losses) when those arrangements are unwound or come to an end including tidying up a balance sheet in advance of a share sale.
John Ioannou, CTA, MacPherson Kelley