Div 7A Loan Agreement Sample

- September 17, 2021

The “loan amount” mentioned in the formula is the amount of the merged loan. For loans taken out under a written loan agreement concluded before the loan date of the private company, an accepted dividend may be received in subsequent years if the necessary minimum annual repayment is not made. Alicia obtains a loan of 10,000 $US from Cleary Pty Ltd. Alicia has until the day of repayment of the loan. Two weeks before the day of the lodgment, Alicia receives an additional $10,000 from Cleary Pty Ltd. It then repays the initial loan of $US 10,000 one week before the day of the lodgment. The initial loan, in the amount of $10,000, is treated as a dividend subject to the private company`s external surplus. As a general rule, the amount of the loan that has not been repaid until the end of the previous year is calculated by deducting the opening balance of the merged loan at the beginning of the previous income year from the amount of principal repaid in that year. Example 11 – Non-compliance with the loan to the shareholder with repayment The computer and the division 7A decision tool can be used to calculate the minimum annual repayment of the principal and interest necessary to repay the merged loan over its maximum duration.

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