Wendy and Steve are the directors and shareholders of Equinox Pty Ltd, an Australian resident private company that owns and operates a grocery store as a family business. Wendy and Steve's three children attend expensive private schools and the fees are due very soon. When Steve inspects the balance of his and Wendy's joint bank account, he sees that there is very little cash available to pay for these fees, but he sees that the company's bank account has plenty of funds due to having recently received a large tax refund. With Wendy peering over his shoulder, Steve pays the school fees directly from the corporate bank account. 'It doesn't matter', he says to Wendy, 'It's our company so it is our money anyway!'.
What are the tax consequences of Steve's actions? What remedies might you recommend to negate these consequences.

Question

Quizplus · Accepted Answer

The Answer of Wendy and Steve are the directors and shareholders of Equinox Pty Ltd, an Australian resident private company that owns and operates a grocery store as a family business. Wendy and Steve's three children attend expensive private schools and the fees are due very soon. When Steve inspects the balance of his and Wendy's joint bank account, he sees that there is very little cash available to pay for these fees, but he sees that the company's bank account has plenty of funds due to having recently received a large tax refund. With Wendy peering over his shoulder, Steve pays the school fees directly from the corporate bank account. 'It doesn't matter', he says to Wendy, 'It's our company so it is our money anyway!'.
What are the tax consequences of Steve's actions? What remedies might you recommend to negate these consequences.

Wendy and Steve Are the Directors and Shareholders of Equinox