Hi,
If a director at the companies accounting year end has a loan from that company, i.e. the director owes the company money, what are the tax implications if the loan is repaid within 6 months of the year end.
My understanding is the following:
For the company
The company is liable for income tax on the grossed up loan balance which is payable to Revenue. However if the loan is repaid within 6 months amounts paid to Revenue are refundable to the company.
For the director
BIK is chargeable on the loan balance as it is deemed a preferential loan and BIK arises and is payable by the employee.
My question is if the loan is repaid by the director with 6 months of the year end can a claim be made to refund all or part of the BIK paid? If yes is this refund claimed through the company on the operation of the directors payroll or is it claimed for personally by the director on filing their own personal income tax return.
Thanks in advance for any comments,
Regards,
If a director at the companies accounting year end has a loan from that company, i.e. the director owes the company money, what are the tax implications if the loan is repaid within 6 months of the year end.
My understanding is the following:
For the company
The company is liable for income tax on the grossed up loan balance which is payable to Revenue. However if the loan is repaid within 6 months amounts paid to Revenue are refundable to the company.
For the director
BIK is chargeable on the loan balance as it is deemed a preferential loan and BIK arises and is payable by the employee.
My question is if the loan is repaid by the director with 6 months of the year end can a claim be made to refund all or part of the BIK paid? If yes is this refund claimed through the company on the operation of the directors payroll or is it claimed for personally by the director on filing their own personal income tax return.
Thanks in advance for any comments,
Regards,