Did the shareholders pay back the loans?
The Administrative Appeals Tribunal (AAT) looked into whether the money borrowed by the shareholders was paid back to the company. They checked the company's financial records for clues.
Firstly, apart from some small refunds, there weren't any recorded payments back to the company for the groceries and personal items bought using the loans. Some other amounts were credited to the shareholders, but these were for things like directors' fees, not loan repayments.
Secondly, there was only one account named 'Shareholders Loan Account' that showed any loans to the shareholders.
The AAT also noted that if the amounts credited to company accounts (like directors' fees) were meant to pay back the loan, they should've been moved to the 'Shareholders Loan Account'. But that didn't happen.
So, the AAT concluded that no repayments were made by the shareholders to reduce their loan balance in the 2012 or 2013 financial years.
The taxpayers argued that the Commissioner overlooked some 'sub-accounts' related to the shareholder loans. However, the AAT found no clear connection between these sub-accounts and the 'Shareholders Loan Account'. It wasn't clear if these sub-accounts recorded any loans or repayments.
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- Topics on Division 7A (1) – Legislative background (1)
- Topics on Division 7A (2) – Legislative background (2)
- Topics on Division 7A (3) – Case Background (1)
- Topics on Division 7A (4) – Case Background (2)
- Topics on Division 7A (5) – Case Background (3)
- Topics on Division 7A (7) – Case Background (5)
