Is the turnover of your private company under $20m?
if so:
If a company has a turnover of less than $20 million, there is a carve-out which means related party ‘at call' loans will be treated as being debt interests rather than equity interests.
see here
Thank you for the reply and yes under 20m
Will a written deed be required or can I just write a letter and put it with the company records: 10 year loan period, no interest. At loan providers "at call request" or no because any loan/equity given to the company by a owner is automatically seen as debt to be repaid?
Hi @viperofpitstorm,
Great question!
We're checking this out with our technical experts and we'll get back to you as soon as possible.
Thanks,
Hi @NicATO
Any word from the team at all?
Thankyou for your patience.
Related party at-call loans provided to companies with an annual turnover of less than $20 million(excluding GST) will not be subject to the Debt/Equity rules and thus will be classified as debt according to ordinary principles. It is prudent to draft a formal loan agreement stating the terms and conditions of the loan, the loan agreement does not need to be elaborate in structure. The ATO cannot advise as to the specifics of the agreement, if uncertain we suggest that you contact a legal representative for advice.
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