Owner owes the company money? Prepare a Division 7A review
If an owner or associate owes money to a private company, prepare a dated movement schedule before deciding the tax treatment. Keep withdrawals, private expenses, repayments and agreements visible. An owner-loan label in the books doesn't establish Division 7A compliance, and a later repayment is not automatically a complete solution.
What you’ll get from this guide: A loan movement record and adviser checklist for the actual Division 7A position.
- Track who owes the company, with dates and evidence.
- Keep repayment funding and prior agreements available.
- Obtain advice about actual lodgement dates and compliance before acting.
This guide helps an owner whose private-company accounts show money owing from a shareholder or associate. Use it to assemble the transaction history for advice. Any loan agreement still needs to be addressed separately.
Confirm the direction of the debt
Write who owes whom at the top of the schedule. Money you lent to the company is a different record from money the company advanced to you. Use the company funding guide for the first situation.
Reconcile the opening balance and list the people or entities involved. Keep separate accounts where the underlying parties differ. A single 'director account' can obscure transactions that need separate review.
Fictional example. Positive amounts increase what the owner owes the company.
| Date/item | Movement | Running amount | Evidence |
|---|---|---|---|
| Opening balance | $5,000 | $5,000 | Prior reconciled schedule |
| 10 August advance | +$12,000 | $17,000 | Company bank transfer |
| 18 August private expense | +$1,000 | $18,000 | Invoice and payment |
| 5 September repayment | −$3,000 | $15,000 | Bank records and source of funds |
The $15,000 is a bookkeeping movement total. It is not a complying-loan balance or a calculated Division 7A dividend.
Preserve the reason and source for each movement
Attach company bank transactions, private-expense invoices, repayment bank evidence and any agreement already in place. Include money moving through related entities. If a repayment was funded by a new advance, record both; don't present only the net bank result.
The ATO's Division 7A risk guidance explains that private expenses and benefits can create problems and that proper records matter. It also explains that a Division 7A dividend generally lacks franking credits. Have the adviser determine the actual scope and consequences from the complete facts.
Put the relevant dates in front of the adviser
The ATO source describes the company's lodgement day as the earlier of actual income-tax-return lodgement and the lodgement due date for this purpose. Record both and ask the agent to confirm their significance before the return is lodged.
Do not assume you can wait until the published due date after a return has already been lodged. Equally, don't assume a transfer back to the company automatically removes the issue. Existing loan terms, repayments, funding arrangements and the specific rules need review.
Reconcile the response to the books
Copy the owner-loan review schedule
Copy the template, save a text file for offline use, or print this page with its examples and sources. Fill in your own copy and check it before relying on it.
Company Borrower/associate Income year Transaction date Advance/private cost Repayment Repayment source Bank reference Agreement Running balance Actual lodgement date Due date confirmed Tax question
Ask for a written list of required actions, responsible people and verified dates. Keep the advice with any signed agreement and the movement schedule. Review the resulting balance sheet with the accountant rather than entering an unexplained adjustment.
The paying-yourself guide covers the broader money-out decision. This schedule addresses the debt already recorded and the evidence needed to resolve it.
Key takeaways
- Track who owes the company, with dates and evidence.
- Keep repayment funding and prior agreements available.
- Obtain advice about actual lodgement dates and compliance before acting.
Where to get help
Give the complete schedule to a registered tax agent experienced with private companies. See ATO Division 7A guidance.
Related tasks
Continue through the tax records and business money guides.
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General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.