Please confirm my understanding

Hi,
I need to learn to help my husband manage his company. Please explain to me if there is any thing I understand it wrong.
My husband operated a company. Weekly his company will pay him Management Fees and Wages for employees. I have my other partime job and part of his employee as well as I helping him with administration and bookeeping, payroll, etc…
The company has some money and we want to access via divident. I think the accountant set up for us 50%-50%. So the divident will go half if we want to access. My understanding is the divident will add to our tax income for next year, is it right? And we can only access divident yearly?
Another question I would like to ask is when I pay company credit card, do I have to pay exactly transaction amount or can I just pay weekly/monthly $2000 into the credit card and keep all the receipts of the transactions for record?
Is there any tips to manage well the company expense, please share with me.
Thanks for your feedback.

 

If you pay a monthly dividend you will get a monthly cash payment. The same if you do daily or yearly.

If you pay part of a credit card you can record that you only paid part of that credit card. You can also link most credit cards to programs like Xero to make the reconciliation easier.

If your company pays you a dividend it will be taxable to you in addition to your existing income.

 

Totally agree.
And if you don’t trust and have complete confidence in your current account then might be best to find a new one.

 

you can pay an interim dividend if you like.

Section 254T(1) of the Corporations Act provides that a company must not pay a dividend unless:

(a) the company's assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend; and

(b) the payment of the dividend is fair and reasonable to the company's shareholders as a whole; and

(c) the payment of the dividend does not materially prejudice the company's ability to pay its creditors.

if you meet that criteria then the company can declare or pay a dividend.

 

Paying divs the way the OP describes could lead to a franking credit trap. No compoany taxes paid? Unfranked dividend at taxpayer marginal rates and the company also pays tax on profits. Total tax rate could be up to 72%. When a company pays wages these are deductible and reduce profit subject to tax. Not so with dividends. So company tax and personal tax both affect total tax rates.

That said I see a possible issue with the description of hubby getting management fees and employees getting wages. This sounds like wages and super is likely liable. And if its not paid and reported with PAYG considered its likely non-deductible. If the accountant hasnt raised some of these issues you should ask why and even consider other advice.

The accounting in software would recognise the card as a liability and each purchase pushes the balance up and repayments push it down so the accounting will track whats owed and what all spending was on. And any GST if applicable. . Its not like you only get a partial deduction. Surely the accountant offers guidance and support ?

 

You can declare a franked Div in the first year without having paid tax so can work. A few extra bits needed with extra thought and planning.

Management fees are wages. Goes through payroll. Franked dividends work better for many.

 

Yes you "can"....I never like to broadly say that as many taxpayers leap to a conculsion and ignore tax date issues. Franking deficiet tax needs some advice. It can also be a strategy. But commonly its a afterthought