35. Loans to Shareholders

Warning 35
Loans by companies to shareholders, if not paid within a reasonable time or where not given “at arms length” can be treated as dividends by the commissioner and taxed to the shareholders, in certain cases. Some get involved in end of year “cheque swapping”, to give the appearance of no loans. It’s not worth it. It’s far better to look at legitimate ways to deal with undistributed profits of the company.