There are rules around taking money out of your business or using its money or assets for yourself and your family. The private use of company money or assets is a focus area for the ATO and the consequences of getting it wrong can be costly.

Common ways to take or use money or assets from a company or trusts are:

• - salary and wages

• fringe benefits

• director fees

• loans from the company

• trust distributions or company dividends

• allowances or reimbursements.

Depending on how the money or assets are extracted or used, there are a range of associated tax obligations.

To get your tax right for the use of your assets:

• only claim deductions against your business income for expenses associated with the business use of your assets. You need to work out the portion spent on private use and exclude this from your calculation

• make sure you meet your tax obligations, including private company benefits and fringe benefits tax (FBT), which may apply when you provide benefits to your employees, shareholders or associates

• review your treatment of these assets each year, as your circumstances may change. If you have started using an asset for private purposes, you need to start apportioning your expenses accordingly

• keep proper records for your business that can explain all transactions, including payments to and receipts from employees, shareholders and associates

• let your tax professional know how you're using your assets so they can correctly apportion the relevant income and deductions.

For more information check out the ATO website >>