Determining whether a loan from the company to a shareholder/employee is received in his or her capacity as an employee or as a shareholder is important. The capacity of the recipient alters the taxation treatment of the loan. A loan to an employee on favourable terms attracts fringe benefits tax (FBT). A loan to a shareholder may be taxed under Division 7A of the Income Tax Assessment Act 1936.
"A Loan by Any Other Name Would Smell So Sweet,"
Revenue Law Journal:
1, Article 3.
Available at: http://epublications.bond.edu.au/rlj/vol18/iss1/3