Division 7A Minimum Loan Repayment Calculator
Compute the minimum yearly repayment (MYR) under s 109E ITAA 1936 for a complying Division 7A loan from a private company to a shareholder or associate. 7-year unsecured maximum term, 25-year secured (real-property mortgage) maximum term.
Inputs
ATO benchmark for FY 2025–26: 8.8%. A complying loan must charge ≥ the benchmark.
Minimum yearly repayment
- Rate used in formula
- 8.8%
- Years used
- 5
- Minimum yearly repayment
- $12,778.00
- Interest component (year 1)
- $4,385.00
- Principal component (year 1)
- $8,393.00
- Total paid over remaining term
- $63,890.01
- Total interest over remaining term
- $13,890.01
Formula: P × r / (1 − (1 + r)−n). Matches the worked example published on the ATO Division 7A page.
Frequently asked questions
What is a Division 7A loan?+
A payment or loan from a private company to a shareholder or their associate. Without a complying loan agreement and a minimum yearly repayment, the unpaid amount is treated as an unfranked dividend (s 109D ITAA 1936).
What if I pay interest below the benchmark rate?+
The loan stops complying with s 109N. The ATO can treat the entire unrepaid balance as a deemed unfranked dividend for the income year. The interest rate on a complying loan must equal or exceed the ATO benchmark rate for the year.
Are repayments deductible to the borrower?+
Generally no — the loan is to a shareholder/associate, not made for an income-producing purpose by the company. The interest component is assessable to the company. Always confirm with a tax agent.
Not financial or tax advice. Educational estimate under Division 7A ITAA 1936 ss 109E, 109N. ATO benchmark rate updated annually. Reference: ATO — Private company payments and loans (Division 7A). Verify your specific facts with a registered tax agent before relying on these figures.