Company tax and depreciation

I think it would be capital of the company. It is similar with trusts but trustees can distribute capital without tax consequences

 

there are always tax consequences of taking money out of a company

 

When you formed the company how much equity did you subscribe for and did you lend the company money?
If you loaned the company money you can be repaid from the company's "spare cash".
There is no tax consequences of being repaid your earlier loan from the company

 

not necessarily. seen this during audits. client doesn't have any loan documentation to support a loan to the company. ATO argues it was a gift.

yes you can gift funds to a company

or it was an increase in subscribed capital and you didn't do the documentation. you didn't do loan documentation either so have demonstrated that you don't document things properly

the argument then it is a return of capital with potential CGT implications. up to you to argue it.

documentation is key to everything.

 

This happens often when a person starts paying company expenses and doesn't account for it. Later the company goes under and there is a claim for a capital loss on the money used to pay the expenses but not recouped. ATO denies the claim without documentation.

 

As Vincent Licciardi has said in a very recent article. Journal Entries are but a mere reflection of what actually happened in practice. They are merely recording the actual sequence of events NOT creating the event.

‘Widespread misunderstanding’: Accountants cautioned on journal entries | Accountants Daily

 

In the early days the narration explained the journal and the journal always had an attached supporting document.
I suppose this is not done anymore ?

 

Surely when the cash is received and the transaction is posted in the evening the loan account would be credited ?
The cash receipts journal is debit cash/bank credit loan account not credit gifts/income ?

 

From what I see loan agreements are rare. Deeds of gift are rarer.