The treatment of loans between companies and shareholders and / or shareholder's associates is outlined in Division 7a of the Income Tax Assessment Act 1936 (ITAA 1936). Where a company:

1. Pays amounts to a shareholder and / or associate;

2. Lends an amount to a shareholder and / or associate; and

3. Forgives a debt owed by a shareholder and / or associate.

The 'amount' will generally be treated as assessable income of the shareholder or associate.

Please note that there are various exemptions provide certain actions are taken.