Client Profile
Owner-managed company with accumulated unpaid director loans.
Challenge
The company had a growing overdrawn director loan balance, which would have resulted in a significant deemed dividend under Division 7A if left unaddressed.
Strategy
Reviewed the client’s overall tax position
Applied fully-franked dividends and director salary adjustments to reduce the loan balance
Ensured all offsets were correctly documented and reported
Confirmed compliance with PAYG, superannuation, and dividend rules
Outcome
The Division 7A exposure was completely eliminated without cash repayments, and the client avoided unexpected personal tax liabilities.
Key Takeaway
Division 7A issues can often be resolved through strategic income planning, not just cash repayments.