Shareholder Current Accounts: What They Are, How They Work, and Why They Matter

Not sure why your accountant says your company owes you—or worse, that you owe the company? The answer usually lies in your shareholder current account. In this guide, we’ll break down what it is, how it works (with examples), how it appears on your balance sheet, and how to manage it correctly so you avoid tax traps and cashflow surprises.

What Is a Shareholder Current Account? 

A shareholder current account is like a bank account inside your business, in your name. It records the financial relationship between you and your company: 

• When you put money in (capital, business expenses paid personally, shareholder salary), it increases your balance. 

• When you take money out (drawings, personal bills paid by the company), it decreases. 

You won’t see this account in online banking—it lives in your company’s financial records. But it’s one of the most important ledgers for tracking who owes who. 

 Where It Sits on the Balance Sheet 

Your shareholder current account is a balance sheet item, not part of your profit or loss. That means: 

• It carries forward year to year 

• The closing balance becomes next year’s opening balance 

It reflects a cumulative record of contributions and withdrawals

Credit vs. Debit: What It Really Means 

Shareholder Current Account Example 

Here’s a practical example of how your current account might move throughout a financial year, using realistic numbers and updated drawings: 

Final Balance: $18,000 in credit 

The company owes you this amount. You can draw this out tax-free—provided the business has enough cash available.

What Increases vs. Decreases a Shareholder Current Account? 

Why You Must Track It Carefully 

If your shareholder current account becomes overdrawn (negative), it’s treated as a loan from the company to you. 

Under New Zealand tax law, the company must: 

• Charge interest at the IRD’s prescribed rate, or 

• Pay Fringe Benefit Tax (FBT) on your behalf 

And the interest becomes income for the company—so it increases its own tax bill too. Poor tracking can also distort financial reporting and cause serious shareholder issues if multiple owners are involved. 

Frequently Asked Questions: Shareholder Current Accounts 

Are shareholder drawings taxable? 

No, drawings aren’t taxed directly—but they must be backed by income that has already been taxed (like salary or dividends). If not, your current account may go overdrawn and cause tax issues. 

What happens if my shareholder current account is overdrawn?

It’s treated as a loan from the company to you. The company must either: 

• Charge interest at IRD’s prescribed rate, or 

• Pay Fringe Benefit Tax 

 What if the company pays my personal tax?

This is a drawing, not a company expense. It reduces your shareholder current account. If not backed by sufficient credit, it contributes to an overdrawn balance. 

Can I pay personal expenses from the business account? 

It’s strongly discouraged. If you do, they are treated as drawings and reduce your current account. Always track and code them properly. 

Does my shareholder current account reset each year? 

No. 
It’s a balance sheet item, so it rolls over year to year. The closing balance becomes the opening balance for the next financial year. 

How does a shareholder salary affect the account?

It’s a credit to your current account. It’s typically allocated at year-end and helps offset the drawings you’ve taken. It’s taxable income. 

I own 50% of the company—shouldn’t our current accounts be equal?

Not unless you’ve contributed and withdrawn exactly the same amounts. Different drawings, contributions, or expenses will create different balances. 

Can I draw money from my current account any time? 

Yes—as long as the account is in credit and the company has the cash. If you draw more than what’s available, it becomes overdrawn and may trigger tax issues. 

Final Thoughts 

Your shareholder current account is more than just a record—it’s a financial mirror of your relationship with your business. Get it right, and you’ll have freedom, flexibility, and confidence. Get it wrong, and you could face tax surprises, cashflow issues, or disputes with co-owners.