How to take the tax sting out internal business loans
Dividends withholding tax of 20% is payable on the interest charged
If you are a business owner, you probably made a loan to your company when you started out to get the business going. Alternatively, you may have made a loan to your company later if your business needed some assistance with cash flow. You may now be wondering how this loan is treated from a tax perspective.
When you or any other shareholder of your company make a loan to the company, it obviously then owes you money. This is commonly known as a credit loan. From a tax perspective such a loan has no negative implications. You may make a loan to your company on an indefinite basis and it is not required that any interest is charged. ..
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