Agreement · Taxation
Division 7A complying loan agreement (private company loan to a shareholder or associate), with minimum yearly repayment schedule
Written loan agreement for a private company lending to a shareholder or associate so the loan is not treated as a deemed dividend: parties, amount, term (7 years unsecured or 25 years secured), interest at least the benchmark rate, repayment, and a minimum yearly repayment schedule.
- Kind
- Agreement. A contract between two or more parties.
- Where it applies
- Australia
- AI use
- Yellow AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at
- 18 October 2026
- Status
- Maintained. Checked on 18 October 2026 against the 2 authorities it cites, for Australia.
- Version
- 1
- Source
- Written for this library
When to use it
Use when a private company has lent, or will lend, money to a shareholder or an associate, or when a payment is to be converted to a loan, and the parties want the loan to meet the Division 7A requirements. It must be signed before the company’s lodgment day for the year the loan is made. Unpaid present entitlements and trust arrangements need separate advice.
Used for these tasks
Each task page says how far AI may help with the task and what the lawyer must review.
How AI may be used
AI may fill the agreement from the loan ledger and compute the minimum yearly repayment schedule with the published benchmark rate; the adviser confirms the lodgment day, the term, the rate and that the agreement reflects the actual loan before it is signed.
AI may
- Fill parties, ACN, amount and dates from the company’s loan ledger and the shareholder register
- Calculate the minimum yearly repayment for each remaining year using the ATO formula and the benchmark rate for each income year, flagging the rate source
- Check the agreement date against the company’s lodgment day and flag a late signing
AI must not
- Must not decide whether a payment is a loan, a dividend, a payment of wages or a repayment of an existing debt
- Must not treat a loan as secured for the 25-year term unless the registered mortgage and the 110% valuation have been confirmed
- Must not backdate the agreement or describe a loan as made under the agreement when it was not
The lawyer checks
- The agreement is signed and dated by both parties before the company’s lodgment day for the income year the loan was made
- The interest rate for each year is at least the benchmark rate for that year, and the term does not exceed the maximum for the security held
- The repayment schedule is the minimum yearly repayment for each year, and the client knows that a shortfall has its own consequences
- Related issues are advised separately: unpaid present entitlements, trust distributions, guarantees, FBT and the shareholder’s capacity to repay
Method: how the Green, Yellow and Red levels are decided. This is guidance for planning, not legal advice.
Read the full text
The full text is for signed-in accounts. It is free. When you sign in you can:
- read the whole precedent, with its drafting notes beside it;
- copy it, or download it as a Word file or Markdown;
- add it to your firm’s knowledge base, so colleagues can find it;
- let the AI tools you connect read it from that knowledge base.
The summary, the law it rests on and the AI-use guidance above stay public. Privacy.
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