Calculate one income year's minimum yearly repayment using the ATO-published 8.77% benchmark rate. Compare eligible repayments and verify whether a secured loan meets the 25-year conditions.
Division 7A of the Income Tax Assessment Act 1936 prevents shareholders of private companies from extracting company profits as tax-free loans. If a private company makes a loan to a shareholder (or their associate) and the loan doesn't meet certain requirements, it's treated as an unfranked deemed dividend.
To avoid this, the loan must either be fully repaid before the company's lodgement day, or placed under a complying loan agreement with minimum yearly repayments.
Division 7A benchmark interest rates
Financial year
Benchmark rate
2025-26
8.37%
2024-25
8.77%
2023-24
8.27%
2022-23
4.77%
2021-22
4.52%
The benchmark rate is based on the RBA's housing loan variable rate published before the start of the financial year.
Loan requirements
Unsecured loans
→Maximum term: 7 years
→Interest rate: Benchmark rate (min)
→Written agreement: Required
→Repayment: By 30 June each year
Secured loans
→Maximum term: 25 years
→Interest rate: Benchmark rate (min)
→Security: Whole loan secured by registered mortgage
→Value test: Property value less prior-ranking secured debt ≥ 110% of loan
→Repayment: By 30 June each year
Minimum yearly repayment formula
Repayment = Balance × r(1+r)^n / ((1+r)^n − 1)
Where: Balance = Opening loan balance for the year, r = Benchmark interest rate, n = Remaining years of the loan term.
→Previous year-end balance: $100,000; remaining term: 6 years
→ATO benchmark rate: 8.77%
→Minimum yearly repayment: $22,139
What happens if you miss a repayment?
If eligible repayments made by 30 June are less than the minimum yearly repayment, the shortfall may be treated as an unfranked dividend. The amount is subject to the distributable-surplus limit and other Division 7A rules.
→The shortfall is added to your assessable income
→You pay tax at your marginal rate (up to 47%)
→No franking credits are attached
→The loan balance is not reduced by the shortfall
FAQ
What is the Division 7A interest rate for 2026-27?
The ATO-published Division 7A benchmark interest rate for 2026-27 is 8.77%. The calculator does not project future rates before the ATO publishes them.
When is the minimum repayment due?
The minimum yearly repayment must generally be made by 30 June of the repayment income year. A shortfall may be treated as an unfranked dividend, subject to the distributable-surplus limit and other Division 7A rules.
Can I pay more than the minimum repayment?
Yes, you can pay more than the minimum repayment at any time. Any excess payment reduces the loan principal, which reduces future minimum repayments and total interest.
What's the difference between secured and unsecured loans?
An unsecured complying loan has a maximum 7-year term. The 25-year term requires the whole loan to be secured by a registered mortgage over real property and, when the loan is made, the property's market value less prior-ranking secured liabilities must be at least 110% of the loan.
Do I need to pay interest to the company?
Interest received is generally assessable income of the company and is taxed under the company's applicable tax rules. A borrower deduction depends on how the borrowed funds are used; private use generally does not produce a deduction.
Is this an ATO Div 7A calculator?
This calculator applies the Division 7A benchmark rate and minimum repayment method used for complying Division 7A loans. It is an independent tool, not an official ATO calculator.
What if I can't afford the minimum repayment?
A repayment shortfall may be treated as an unfranked dividend, subject to Division 7A limits and exceptions. Do not assume a later refinance or replacement loan counts as a repayment; obtain tax advice before 30 June.
Tax Accuracy & Sources
Reviewed: 17 July 2026 · Tax year: 2026-27
Estimates minimum yearly repayments for complying Division 7A loans. It does not determine loan character, distributable surplus limits, or all exceptions.