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Loans are Seldom What they Seem

Published on 18 Jul 2006 | Took place at Hawthorn Receptions, Hawthorn, VIC

Loans are seldom what they seem. Clients see loans as part and parcel of everyday transactions through their businesses. Lawyers treat loans as being something that arises between a debtor and creditor. The Accountant's view differs yet again. Recent ATO emphasis on the forgiveness of pre-Division 7A loans also adds to the confusion.

Loans, whether debit or credit balances, need to be understood not only from a legal viewpoint but also an accounting viewpoint in order to ensure that financial statements that are prepared are correct and accurate and can be relied upon. Are you certain that the financial statements you prepare or rely upon are correct? Are receivables or payables truly loans? Unless financial statements are correctly prepared then Division 7A problems are almost certain to arise. Each ‘loan’ for Division 7A purposes needs to be identified and properly dealt with. Each transaction with a related entity needs to be reviewed and classified to determine whether it attracts Division 7A or another special taxing provision.

Get a 20% discount when you buy all the items from this event.

Individual sessions

Loans: taxation

Author(s):  Chris WOOKEY,  Ian DUNNE

Topics covered in this paper include:

  • extended definition of loan for Division 7A purposes
  • common Division 7A mistakes
  • residual effect of section 108
  • issue in forgiving loans
  • strategies for solving Division 7A problems before they arise
  • issues with interposed entities
  • debt equity rules, SME carve-outs.
Materials from this session:

Loans: a technical view

Author(s):  Michael Bearman

This paper covers:

  • what is a loan at law?
  • when does a loan arise?
  • statute of limitations issues
  • when is an entity a creditor or a beneficiary?
  • can a debit loan be theft at law?
Materials from this session:

Loans: an accountant's view

Author(s):  Craig MCCORMICK

This paper covers:
  • loans - when does a loans arise?
  • is a loan different to an amount held on trust?
  • recognising loans and distinguishing them from contributed capital?
  • ensuring there are no future disputes because all transactions are properly documented
  • role of an accountant in ‘creating’ loans - where does that debit entry go?
  • ATO Taxation Rulings and Determinations Case Study.
Materials from this session: