Company A is in the process of deregistration. The shareholder/director owes Company A R54 000 by means of a loan account. (The only other balance sheet amount is Retained Earnings). The loan account was created as she withdrew the money to close Company
Author: Peter Surtees
Important:
This answer is based on tax law year ending 28 February 2020.
Answer:
However you wind up the company, dividends tax is payable on the retained earnings. You can’t get them out of the company in any other way. So whether you transfer the retained earnings to the loan account to set the two off, or have the shareholder repay the loan so that the company can use the cash to pay the liquidation dividend, the dividends tax will be payable.
You’ve answered your own question when you state that the loss from failure to claim the loan would be added back for tax purposes. Think about it; the adding back would restore the retained earnings balance for tax purposes, and there you’d have the dividends tax liability still with you.