Prepare a shareholder-loan rollforward for an Australian Division 7A review

Start with the private company's transactions involving shareholders and their associates. Identify who owes whom, the original advance date and the arrangement supporting the balance. Keep a shareholder's loan to the company separate from money borrowed from it. A net related-party account can hide the transaction the Division 7A review needs to examine.

Obtain the last approved loan schedule and identify new advances, private expenses, interest, repayments and other changes. Give the adviser the underlying facts before calling every item a loan. The ATO's guidance emphasizes complete records and appropriate written terms for relevant loans; an accounting label does not establish that the requirements have been met.

For relevant new loans, the ATO explains the importance of repayment or complying terms before the company's lodgment day. That day is the earlier of actual lodgment and the return's due date. Record both dates and warn the adviser before an early filing changes the available time. A year-end journal prepared later does not show that the underlying action occurred on time.

For an existing complying loan, obtain the signed agreement, remaining term, opening balance and the applicable year's repayment calculation. The benchmark rate and minimum yearly repayment require year-specific review. Keep these later-year obligations separate from the initial agreement deadline, rather than treating every shareholder balance as though it were a newly made loan.

List each repayment date, amount, bank reference and source of funds. Include related advances before and after the repayment. If the borrower used a dividend or another offset, retain the legal entitlement, approval and accounting entries for the adviser to assess. A decrease in the ledger balance alone does not establish an effective repayment for tax purposes.

Section 109R can disregard certain repayments involving similar or larger borrowing from the company. ATO guidance also addresses notional loans through interposed entities. Give the adviser the wider transaction chain where relevant instead of limiting the file to the company's direct bank receipt.

Suppose the records show a $12,000 repayment followed by a $12,000 advance. The year-end net change is zero, but the dates, purpose and funding arrangements matter to the review. Preserve both entries and the surrounding correspondence. This illustration identifies a question for the adviser; it does not establish that every equal repayment and advance is disregarded.

Reconcile interest separately from principal and distinguish the amount paid from the amount credited by journal. Record any correction to a prior year's opening balance with its approval. Reconstructing the chronology can reveal that an apparently sufficient annual repayment was assigned to the wrong loan or supported by an unexecuted offset.

Give the adviser the reconciled rollforward, agreements, timing evidence and related transactions before the relevant deadline. Ask for the approved repayment assessment and any further action, without assuming a late correction automatically prevents a deemed dividend. Carry the resulting balances and future obligations into the next year's calendar, with the exact source documents needed to revisit the decision.