Estimate the minimum yearly repayment on a complying Division 7A loan and see how the benchmark interest rate can affect the repayment required for the income year.
Division 7A can treat certain payments, loans and forgiven debts from a private company to a shareholder or their associate as an unfranked dividend. A loan may avoid that outcome where it is repaid or placed on complying written terms within the required timeframe and the minimum yearly repayments are then met.
The benchmark interest rate changes from year to year. For the 2026–27 income year, the published Division 7A benchmark rate is 8.77%. This calculator uses the loan balance, remaining term and applicable rate to estimate the minimum yearly repayment. It does not test every Division 7A rule, so the loan agreement, timing of repayments and company records still need to be reviewed.
Check the key rules behind Division 7A loan terms, rates and minimum repayments.
The benchmark interest rate for the 2026–27 income year is 8.77%. The ATO resets the rate for each income year, so the minimum yearly repayment on an existing complying loan can change even when the loan itself has not changed.
A standard unsecured complying loan generally has a maximum term of seven years. A loan can have a maximum term of 25 years where the required real-property mortgage security conditions are satisfied.
Broadly, a qualifying loan must be repaid or put on complying written terms by the private company’s lodgment day for the year in which the loan was made. The exact timing should be checked against the company’s circumstances and actual lodgment date.
A repayment shortfall can result in an unfranked deemed dividend for the relevant income year, subject to the Division 7A rules and the company’s distributable surplus. Paying tax on a deemed dividend does not itself repay the outstanding loan balance.
No. It estimates a repayment using the figures entered. Compliance also depends on matters such as the written agreement, loan term, security, timing, actual repayments and other Division 7A provisions.
SMH Accountants & Advisors can review the loan terms, repayment history and current-year requirements before a shortfall becomes a tax issue.
