• 20 March, 2026

Personal Use of Business Funds: A Complete Australian Tax Guide (2026)

Running a business gives you control over your finances—but using business money or assets for personal use comes with strict tax obligations in Australia.

If not handled correctly, it can lead to compliance issues, unexpected tax liabilities, and even ATO penalties.

In this guide, we break down what you must report, how to stay compliant, and how to manage personal use of business funds correctly.

Who Does This Apply To?

This applies if you are involved in a company or trust structure, including:

• Company directors, employees, or shareholders
• Trust trustees, employees, or beneficiaries
• Directors of a corporate trustee
• Associates of shareholders (including spouse, relatives, or related entities)

If you fall into any of these categories, the ATO requires proper reporting of any money or benefits you take from the business.

Common Ways Business Money or Assets Are Used Personally

Here are the most common ways individuals access business funds or benefits:

1. Salary and Wages

Payments made to you as an employee of your business.

2. Directors’ Fees

Compensation received for acting as a company director.

3. Dividends

Profit distributions paid to shareholders.

4. Trust Distributions

Income distributed from a trust to beneficiaries.

5. Business Loans

Money borrowed from the company or trust.

6. Fringe Benefits

Personal use of business assets such as:

• Company car
• Payment of personal expenses
• Entertainment expenses

7. Allowances & Reimbursements

Expenses reimbursed by the business.

Why Proper Reporting Matters

Using business funds incorrectly can trigger:

• Additional income tax liabilities
• Fringe Benefits Tax (FBT)
• Division 7A issues (for company loans)
• ATO penalties and audits

That’s why accurate reporting and documentation are critical.

How to Record Personal Use of Business Funds

To stay compliant, you must maintain clear records of:

• Money withdrawn from the business
• Personal use of company or trust assets
• Loan agreements (if applicable)
• Supporting documents (receipts, logs, agreements)

Proper bookkeeping ensures transparency and protects you during audits.

Salary, Wages & Directors’ Fees: What to Report

If you receive income from your business:

• It must be included in your individual tax return
• The business may claim a deduction (if compliant)

Your Business Must Also:

• Register for PAYG withholding
• Withhold tax from payments
• Report via Business Activity Statements (BAS)
• Use Single Touch Payroll (STP) reporting
• Pay withheld tax to the ATO
• Make superannuation contributions on time

Fringe Benefits Tax (FBT): What You Need to Know

FBT applies when a business provides non-cash benefits to:

• Employees
• Directors
• Their families or associates

Examples Include:

• Personal use of a company car
• Paying private expenses
• Providing lifestyle benefits

Business Obligations:

• Lodge an FBT return
• Pay applicable FBT
• Maintain detailed records
• Calculate the taxable value of benefits correctly

Loans from Your Business (Division 7A Risk)

If you take money from a company as a loan, it may be treated as a deemed dividend unless:

• A formal loan agreement exists
• Interest is charged at benchmark rates
• Minimum repayments are made annually

Failure to comply can result in unexpected taxable income.

Best Practices to Stay ATO-Compliant

To avoid costly mistakes:

✔ Keep personal and business finances separate
✔ Maintain accurate and up-to-date records
✔ Document all transactions clearly
✔ Use proper loan agreements
✔ Seek professional accounting advice

How Workpaper Can Help

Managing personal use of business funds can quickly become complex. At Workpaper Accounting Services, we help you:

• Stay compliant with ATO regulations
• Manage payroll, FBT, and tax reporting
• Maintain accurate bookkeeping
• Structure your business efficiently
• Avoid penalties and audits

Get Expert Help Today

If you’re unsure how to report business funds used personally, our team is here to help.

Workpaper Accounting Services
🌐 Website: https://workpaper.com.au/

📞 Phone: 0485 825 915
📧 Email: info@workpaper.com.au

📍 Address: 7 Bridge St, Werribee, Victoria 3030, Australia