I don’t know where “here” is, but in the U.K. it’s perfectly legal. You can even give yourself (as a director) an interest free loan.
However if the amount owed is greater than ~£10k(?) at the end of the corporate tax year, you need to pay it back within 9 months or it’s treated as income and taxed accordingly (there’s also regulations about paying it off before the end of the corporate tax year and taking out directly after). Still 21 months for an interest free loan isn’t bad...
Re:Kodak’s Dubious Blockchain Gamble
by BrentOzar on Wednesday January 31, 2018 @06:05AM
(#16272998)
> Probably because then you can fairly easily create a tax evasion scheme where you never pay yourself a salary and just keep borrowing money at zero interest and payment due long about five years after the sun explodes...
It's legal here in the US, but there are rules around minimum interest charges. I dealt with this during a partner buyout - the payment schedule HAD to have interest involved or else it was considered a fishy loan.
I wonder what "here" is, in Canada, generally, when you borrow funds from your company and don't repay it within one year, the CRA can assess the outstanding balance as ordinary income at an income tax rate similar to that of a salary.
I'm surprised loaning money from the company is legal in the U.S., it's certainly not here. Probably because then you can fairly easily create a tax evasion scheme where you never pay yourself a salary and just keep borrowing money at zero interest and payment due long about five years after the sun explodes...