---
title: "Division 7A complying loan agreement (private company loan to a shareholder or associate), with minimum yearly repayment schedule"
url: "https://ailawframework.com/precedents/taxation/division-7a-complying-loan-agreement"
type: "precedent"
site: "AI Law Framework"
id: "a26-division-7a-complying-loan-agreement"
area_id: "A26"
kind: "agreement"
ai_level: "yellow"
version: 1
task_ids: ["A26-T1-R11"]
law_stated_as_at: "2026-10-18"
---

# 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…

Canonical page: https://ailawframework.com/precedents/taxation/division-7a-complying-loan-agreement  
Law stated as at: 2026-10-18

Site index for agents: https://ailawframework.com/llms.txt

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.

## Key facts

- Kind: Agreement. A contract between two or more parties.
- Practice area: [Taxation](https://ailawframework.com/precedents/taxation.md)
- Jurisdictions: Australia
- AI level: Yellow. AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at: 2026-10-18
- Status: Maintained. Checked on 2026-10-18 against the 2 authorities it cites, for Australia.

## 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

- [Build a shareholder-loan and trust-distribution issues table](https://ailawframework.com/practice/taxation/build-a-shareholder-loan-and-trust-distribution-issues-table.md)

## 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

## Authorities

- [Income Tax Assessment Act 1936 (Cth) Pt III Div 7A (private company loans treated as dividends unless excluded), as explained in ATO, Division 7A loans (written agreement before lodgment day; minimum contents; benchmark interest rate; maximum term of 25 years secured by registered mortgage with 110% cover or 7 years otherwise; minimum yearly repayments)](https://www.ato.gov.au/businesses-and-organisations/corporate-tax-measures-and-assurance/private-company-benefits-division-7a-dividends/in-detail/division-7a-loans)
- [ATO, Division 7A – benchmark interest rate (rates by income year, updated annually)](https://www.ato.gov.au/tax-rates-and-codes/division-7a-benchmark-interest-rate)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/taxation/division-7a-complying-loan-agreement and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*