Calculator
Div 7A calculator: what goes back this year.
You took money out of your company. Work out this year's minimum repayment at the 8.77% benchmark rate for 2026-27, whether it goes back as cash or as a dividend the company declares, and what either one costs you.
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The number
Your minimum yearly repayment for 2026-27.
The calculator needs only the amount and the year the money came out - the repayment lands as you type, no sign-up. When you are ready for the decisions, step up to the decision tool: split each repayment between cash and a franked dividend, see the tax year by year, compare the whole term against clearing the loan with a dividend now, and test the company's distributable surplus. Both are about how you handle the loan; neither decides whether Division 7A applies to your arrangement.
Your loan
s 109N(3): a 25-year term is only available with that security, and only where the loan does not exceed 110% of the property's market value less any prior charges.
Div 7A minimum yearly repayment, 2026-27
$19,716
On $100,000 owing at the start of the year, at the 8.77% benchmark rate, with 7 years of the term left. $8,770 of it is interest.
If it is not made, the shortfall becomes an unfranked dividend in your hands under s 109E — taxed at your marginal rate with no franking credit — and it does not reduce the loan: taxed on part of the money, still owing all of it.
Year by year
| Year | Rate | Opening | Interest | Repayment | Closing |
|---|---|---|---|---|---|
| 2026-27 | 8.77% | $100,000 | $8,770 | $19,716 | $89,054 |
| 2027-28 | 8.77% | $89,054 | $7,810 | $19,716 | $77,148 |
| 2028-29 | 8.77% | $77,148 | $6,766 | $19,716 | $64,198 |
| 2029-30 | 8.77% | $64,198 | $5,630 | $19,716 | $50,112 |
| 2030-31 | 8.77% | $50,112 | $4,395 | $19,716 | $34,791 |
| 2031-32 | 8.77% | $34,791 | $3,051 | $19,716 | $18,126 |
| 2032-33 | 8.77% | $18,126 | $1,590 | $19,716 | $0 |
| Total | $38,012 | $138,012 | $0 |
Now the decision: how will you fund it?
The decision tool splits each repayment between cash and a dividend the company declares against the loan, estimates the tax year by year, compares the whole term with clearing the loan by dividend now, and can test the company’s distributable surplus.
What this assumes
- The ATO has published benchmark rates to 2026-27. The 6 years from 2027-28 onwards carry 8.77% as an assumption. The real rate is set each 1 July and the repayment moves with it, so treat later rows as a shape rather than a schedule.
- Interest accrues on the opening balance and the repayment is applied at the end of the year. Repaying earlier leaves slightly less interest, so the schedule never understates what has to be paid.
- This does not test whether the loan agreement complies, whether repayments could be disregarded under s 109R, or the interposed-entity rules.
- Engine 1.0.0, ATO rate table 2026-08-31.
The rate
The Div 7A benchmark interest rate, year by year.
The Div 7A benchmark interest rate for 2026-27 is 8.77%, up from 8.37% in 2025-26. The ATO resets it every 1 July from the RBA's standard variable owner-occupier housing indicator rate for the preceding May - which is why it jumped when mortgage rates did - and a complying loan reprices with it every year. A repayment worked out once and rolled forward comes up short.
| Income year | Benchmark rate | Applies from |
|---|---|---|
| 2026-27Current | 8.77% | 1 July 2026 |
| 2025-26 | 8.37% | 1 July 2025 |
| 2024-25 | 8.77% | 1 July 2024 |
| 2023-24 | 8.27% | 1 July 2023 |
| 2022-23 | 4.77% | 1 July 2022 |
| 2021-22 | 4.52% | 1 July 2021 |
| 2020-21 | 4.52% | 1 July 2020 |
| 2019-20 | 5.37% | 1 July 2019 |
Rates as published by the ATO’s Division 7A benchmark interest rate page, last checked 31 August 2026. The calculator above uses this same table — a schedule that runs past the newest published year carries the 8.77% rate forward and says so in its assumptions.
Why it matters
The loan account is the most common problem we inherit.
Not because directors are doing anything wrong - because the money came out through the year for ordinary reasons and nobody wrote it down as a loan until the accounts were prepared.
The agreement has a deadline
A complying loan agreement has to be in writing before the company's lodgment day for the year the loan was made. Miss that and the whole amount is a dividend - there is no putting it on terms afterwards.
The rate moves every year
The benchmark rate is reset each 1 July. It is 8.77% now and was 8.37% last year, so a repayment set once and rolled forward will be short.
A shortfall is not a repayment plan
Paying tax on the shortfall does not clear the loan. You end up taxed on part of the money and still owing all of it, which is the worst of both.
The limits
What this calculator does not do.
Every one of these is a place where the real answer depends on facts a calculator cannot see. They are listed because a number without its limits is worse than no number.
- It does not decide whether Division 7A applies to your arrangement, or whether your loan agreement is a complying one. Both are questions about documents and facts, not arithmetic.
- It estimates your tax at one flat marginal rate you enter. It is not a tax return: no progressive brackets, no offsets, no other income, no Medicare levy surcharge.
- A franked dividend assumes the company actually has the franking credits to attach. A company that has not paid much tax may not.
- Whether the interest is deductible turns on what the borrowed money was used for, and that is a question about your circumstances rather than about the loan.
- The 25-year term needs a registered mortgage over real property and a loan within 110% of that property's value less prior charges. Ticking the box here does not create the security.
- Distributable surplus can need market valuations and judgment about which liabilities and provisions count. The module here is a working paper for that conversation, not a substitute for it.
- It does not test whether a repayment could be disregarded under s 109R, and it does not apply the interposed-entity rules or any other anti-avoidance provision.
- Accounting fees, the cash-flow cost of finding the money and what else you could have done with it are all excluded unless you enter them.
Written from the primary sources
The formulas here come from Division 7A of the Income Tax Assessment Act 1936 — the minimum repayment from s 109E(6), the maximum terms from s 109N, the distributable surplus cap and its apportionment from s 109Y. Benchmark rates are the ATO’s published rates, held in a versioned table (currently 2026-08-31) so that a calculation always keeps the rate it was actually run on. Check the current position for yourself:
Div 7A questions, answered.
What is a Div 7A loan?
Div 7A is Division 7A of the Income Tax Assessment Act 1936. If you take money out of your own private company and it is not wages, a franked dividend or a repayment of a genuine debt, Division 7A treats it as an unfranked dividend - taxed at your marginal rate with no franking credit to offset it. The fix is to put the amount on a complying loan agreement before the company's lodgment day and then actually service it every year. That serviced amount is what everyone calls a Div 7A loan.
How is the Div 7A minimum yearly repayment calculated?
It is an amortising annuity under s 109E(6): the balance not repaid at the end of the previous year, at the benchmark rate for the current year, spread over the years left in the maximum term. The benchmark rate is reset every 1 July - 8.77% for 2026-27 - so the repayment moves each year even though the loan does not. That is the step most often missed by a spreadsheet set up once and rolled forward.
What is the Div 7A benchmark interest rate for 2026-27?
8.77% for the year ending 30 June 2027, up from 8.37% in 2025-26. The ATO publishes it each July from the RBA's standard variable owner-occupier housing indicator rate for the preceding May, and it applies to every complying Division 7A loan for that year, whenever the loan was made. The full history is in the rate table on this page.
What happens if I miss the minimum repayment?
The shortfall itself becomes an unfranked dividend in your hands for that year. It does not reduce the loan - you still owe the money, you have simply paid tax on part of it. The Commissioner has a discretion to disregard the dividend where the failure was due to an honest mistake or circumstances beyond your control, but it has to be applied for and it is not a formality.
Can the deemed dividend be more than the company can pay?
No. Section 109Y caps it at the company's distributable surplus, and apportions across amounts where there is more than one. The catch is that net assets go in at market value where book value is not a proper reflection - TD 2009/5 - so internally generated goodwill counts even though it appears nowhere in the accounts. Companies routinely have a far larger surplus than their balance sheet suggests.
Seven years or twenty-five?
Twenty-five years needs a registered mortgage over real property, and the loan cannot exceed 110% of that property's market value less any prior charges. Without that security the maximum term is seven years. Most Div 7A loans are the seven-year kind.
Do I need a Div 7A loan agreement template?
You need a written loan agreement in place before the company's lodgment day for the year the money came out. It has to identify the parties and the amount, set an interest rate at least equal to the benchmark rate for each year, and keep the term within the s 109N maximums - seven years unsecured, twenty-five with a registered mortgage over real property. A template can capture those terms, but most Div 7A problems are not drafting problems: the agreement is signed late, or signed and then not serviced. Have the agreement and the repayment plan prepared together, so both exist before the deadline.
Should the repayment be cash or a dividend?
Both work - the loan is repaid either way. Cash means finding the money from outside the company. A dividend means the company declares one and applies it against the loan account, so nothing has to move: the amount is assessable to you, a franked dividend brings a credit with it, and the loan comes down by the same figure. Which one is right turns on your other income that year and on the company's franking account, which is exactly the sort of thing worth a conversation.
Is it cheaper to just declare a dividend now and clear the whole loan?
Sometimes. Clearing it in one year pushes the whole amount into one year's income, usually at the top rate; spreading it across the term keeps each year smaller but adds seven or twenty-five years of interest, and the company pays tax on that interest. The calculator estimates both so you can see the size of the gap, but it uses one flat marginal rate rather than the progressive brackets, so treat the comparison as a direction rather than a decision.
Can I just pay it back before year end instead?
Yes - repay the loan in full before the company's lodgment day for that year and there is no deemed dividend and no loan agreement needed. What does not work is repaying it and drawing it straight back out; s 109R disregards a repayment made where the intention was to borrow a similar amount again.
Loan account needs sorting?
If the agreement was never signed, or the repayments have slipped, there are usually more options than the first conversation suggests. Bring us the balance and we will tell you where you stand.
Or call 07 3899 8311.