to their shareholders – or associates – will rise by more than 70 per cent from July 1, triggering outrage from owners who claim they are being “crucified” by rising costs.
Cole, who has spent more than 20 years building her business, says: “People who want to work hard and build a business are being crucified. Everyone is hurting. There is a lot of pressure.”, such as for superannuation contributions, when made to shareholders who are typically family members. According to CPA Australia, which represents certified public accountants, about 97 per cent of the borrowers are small company shareholders with an average loan of around $550,000.
Division 7A provisions are complex because of moves by the Australian Tax Office to prevent loopholes devised by enterprising entrepreneurs and their accountants. Minor variations in what is paid or lent to a shareholder or associate of the company can lead to complicated outcomes, according to tax specialists.