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the loan is payable on demand, depending on availability of cash. what happened is there are personal bank accounts of the member linked to the business account and there was more money going out than into the business account, and auditors decided that it should be treated as a fringe benefit and taxed.
I know that the loan account should be raised a debtor on the balance sheet but i dont know what cotra account to use?
Either I don't fully understand what has happened or this setup sounds very strange. I can't quite figure out how he managed to draw out R2,5bar for what seems to be personal expenses. If he has done this, how did the cash get into his personal account in the first place? If its drawn from the main business account, then the bank account is your contra. But I'm obviously missing something.
I'm also under the impression that when a member has a loan from a cc for a period of more than one year, there is the risk that SARS will see that as effectively being a dividend payment. It may have something to do with whether interest is being paid or not. I'm with Dave on saying this is more for a tax expert, and my comments are largely hear say.
Ultimately if we forget the creative accounting and tax dodges, and call a spade a spade, it seems this member has really been paid a R2,5M extra salary and it should be treated as such. However I'm sure a decent tax consultant could wangle a better solution.
Am I right in saying that the member has effectively
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