Introduction
This precedent is designed to document a loan from a private company to a shareholder or associate in compliance with Division 7A of the Income Tax Assessment Act 1936 (Cth).
The document sets out the required terms to ensure that the loan is not treated as a deemed dividend, including interest, repayment obligations and statutory compliance provisions.
It includes provisions dealing with benchmark interest rates, minimum yearly repayments, loan terms, and events of default in accordance with Division 7A requirements.
This precedent provides a structured framework for accountants and businesses to document Division 7A compliant loans and manage tax risk.
What is a Division 7A Loan Agreement?
A Division 7A loan agreement is a legal document used to record loans made by a private company to a shareholder or associate to avoid the loan being treated as a deemed dividend for tax purposes.
It is required under Division 7A of the Income Tax Assessment Act 1936, which sets out strict rules regarding loan terms, interest rates and repayments.
Which Loan Document Do I Need?
Use this guide to select the appropriate loan document based on the level of security or purpose of the loan.
| Your Situation | Recommended Document | Security / Purpose |
|---|---|---|
| Simple loan with no security required | Loan Agreement | Unsecured |
| Loan secured over business assets or personal property | PPSR Loan Agreement | PPSR Registration |
| Loan requiring stronger protection including real property support and guarantee |
PPSR Loan Agreement with Guarantee & Caveat |
PPSR + Caveat + Guarantee |
| Loan secured over land using a registered mortgage | Mortgage Loan Agreement | Registered Mortgage |
| Loan to a shareholder or director requiring ATO compliance |
Division 7A Loan Agreement |
Tax Compliance (ATO) |
Division 7A loans are subject to specific ATO requirements including minimum interest rates and repayment terms.
Professionally Drafted Legal Precedent
Prepared by experienced Australian commercial lawyers, this precedent provides a comprehensive and reliable framework for real-world use.
The document is fully editable in Microsoft Word and includes an Editing Legal Documents Guide to assist with completing and tailoring the agreement.
Designed for immediate use, it can be adapted to suit a wide range of legal and commercial scenarios.
At A Glance
What This Document Covers
• Loans from company to shareholder
• Division 7A compliance requirements
• Interest and repayment structure
• Tax risk management
Key Clauses Included
• Benchmark interest rate provisions
• Minimum yearly repayment formula
• Term and loan structure
• Default and enforcement clauses
Typical Use
• Shareholder loans from companies
• Division 7A compliance
• Accountant-advised transactions
• Avoiding deemed dividend treatment
Download Details
• Lawyer-drafted precedent
• Designed for Australian tax compliance
• Fully editable Microsoft Word document
• Instant download available immediately after purchase
Drafted by Legal Professionals
Our precedents are prepared by Australian legal practitioners and reflect commonly used legal drafting standards.
Practical and Easy to Use
Each template provides a structured framework that can be adapted to suit the specific transaction or matter.
Instant Access
Download immediately after purchase and edit the document in Microsoft Word to suit your requirements.
Related Precedents
Also Known As
This document may also be referred to as:
• Division 7A compliant loan agreement
• Div 7A loan agreement
• Shareholder loan agreement (Division 7A)
• Company loan agreement (Division 7A)
Frequently Asked Questions
What is a Division 7A?
Division 7A is a tax rule that prevents private companies from making tax-free distributions to shareholders by treating certain loans as deemed dividends.
Why do I need a Division 7A loan agreement?
Without a compliant loan agreement, loans from a company to a shareholder may be treated as taxable dividends under Division 7A.
What are minimum yearly repayments?
Division 7A requires borrowers to make minimum yearly repayments calculated using a statutory formula to avoid deemed dividend treatment.
Can this agreement be customised?
Yes. This precedent is fully editable and can be tailored to reflect loan amounts, terms, security and repayment arrangements.
Division 7A Loan Agreement – Instant Download
• Lawyer-drafted Division 7A compliant loan agreement
• Designed for Australian tax compliance
• Fully editable Microsoft Word document
• Includes repayment and interest provisions
• Instant download available immediately after purchase
Used by lawyers, businesses and commercial operators across Australia.
Download This Precedent
Instant download. Fully editable Microsoft Word format. Includes practical drafting guidance.