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Is a surety payment on behalf of a company, tax deductible in your personal capacity?

Posted 13 March 2015

I am the sole shareholder and director of a company. I signed surety for a bank overdraft. This was called up and I had to pay. Is it tax deductible in my personal capacity?

TaxTim TaxTim says:
13 March 2015 at 11:46

It is not tax deductible as the amount in question is a capital figure - a loan essentially.

FWG says:
13 March 2015 at 11:59

What happens if the company is liquidated and cannot repay the loan?

TaxTim TaxTim says:
13 March 2015 at 12:00

The bank could sue you personally for the amount as you have signed surety.

FWG says:
13 March 2015 at 12:09

I have been sued and have paid. What if the company is liquidated and cannot pay me back? It thus becomes a bad debt and the question is, is it tax deductible?

TaxTim TaxTim says:
13 March 2015 at 12:17

The company and you are connected persons, so unfortunately you will not be able to claim the capital loss, otherwise in theory anyone could take advantage of such a transaction.

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