Australian tax · FY2023-24
Division 7A minimum repayment calculator
For 1 July 2023 to 30 June 2024 the Division 7A benchmark interest rate is 8.27%. Enter what is still owed at the start of the year and how long the loan has left to run, and this works out the minimum that has to be repaid to keep it complying.
FY2023-24Other years
Calculator
What this year's repayment pays off
- Principal: $11,115 (57.3%)
- Interest: $8,270 (42.7%)
The interest and closing balance assume the whole repayment is made on 30 June. The ATO charges interest on the daily balance, so paying earlier in the year means less interest and more off the balance. The minimum repayment itself does not change.
This is an estimate, not advice. It applies the published rate to what you enter; whether the method suits your circumstances, and whether your records support the figures, is a question for your tax agent.
What the minimum repayment is
A private company that lends to a shareholder or their associate makes a deemed dividend of the amount not repaid, unless the loan is repaid, or put on a complying agreement, before the company’s lodgment day for the year the loan was made — the earlier of the return’s due date and the day it is actually lodged. A complying agreement is in writing, charges at least the benchmark rate, and is repaid over no more than its maximum term. Either way, the deemed dividends a company makes in a year are capped at its distributable surplus for that year.
The minimum yearly repayment is the annuity that clears the balance over the years left to run. It is not the interest — interest is part of it, and the rest comes off what is owed:
- Interest on the opening balance at the year’s benchmark rate
- Enough principal that the loan is gone by the end of its term
If it is not repaid
The shortfall is a dividend to the borrower for that income year — assessable, generally unfranked, and limited to the company’s distributable surplus. It is the shortfall that is deemed, not the whole loan, so a repayment that is late rather than absent still does most of the work.
The Commissioner can disregard a failure that was honest and has been corrected. That is an application with a discretion at the end of it, not something to plan around.
One thing the page cannot see and you should: a repayment made by declaring a dividend and setting it off counts, and a repayment funded by a fresh loan from the same company does not.
The rate is a floor, and the term is a ceiling
8.27% is the benchmark for FY2023-24. An agreement may charge more than the benchmark — plenty do, where the loan was documented alongside commercial borrowing — and where it does, the interest is the loan’s own and the repayment is larger than the figure above. It may not charge less.
The rate is set for each income year and applies to that year, so a seven-year loan is recalculated against a new benchmark every year of its life. That is why this page has one url per year rather than a dropdown.
Worked example
A balance of $100,000 at the start of FY2023-24, with 7 years left to run at 8.27%: the minimum yearly repayment is $19,385. Of that, $8,270 is interest and $11,115 comes off the balance, leaving $88,885 to carry into the next year.
Working the company file, not just the loan?
BeforeMay builds the workpaper behind a company return from the client’s own documents, and raises the questions a reviewer would — including the ones about loans to shareholders.
Start a case freeWhere does client data go?
A$99 free to start. No card.
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