Division 7A Benchmark Interest Rate
The ATO Division 7A benchmark interest rate for 2026-27 is 8.77%. It sets the minimum interest rate on a complying Division 7A loan and drives the minimum yearly repayment calculation.
What the benchmark rate is
Under Division 7A of Part III of the Income Tax Assessment Act 1936, the benchmark interest rate for an income year is the Reserve Bank of Australia's “Housing loans; Banks; Variable; Standard; Owner-occupier” indicator rate, last published before the start of that income year. For a standard 30 June balancer, that means the rate the RBA publishes each June sets the benchmark for the income year beginning the following 1 July — and it does not move again even if the RBA revises the published figure afterwards.
A private company that has adopted an ATO-approved substituted accounting period instead uses the RBA rate last published before its own income year starts, which can differ from the 1 July date used in the table below.
How the rate is used
The benchmark rate does two jobs on a Division 7A loan from a private company to a shareholder or associate. First, it is the minimum interest rate a complying loan agreement must charge — charging less turns the shortfall into a potential unfranked deemed dividend. Second, it is the interest rate used in the minimum yearly repayment (MYR) formula, which amortises the opening loan balance over the years remaining on its term:
| Step | What happens |
|---|---|
| 1 | Take the loan's opening balance for the income year |
| 2 | Apply that year's benchmark rate over the years remaining on the loan term |
| 3 | The result is the minimum repayment (principal + interest) due by 30 June |
| 4 | A shortfall against that minimum can be treated as a deemed dividend |
Loan terms are capped at 7 years for an unsecured loan or 25 years for a loan secured by a registered mortgage over real property. Work out your own minimum repayment, using the 2026-27 rate of 8.77% or any earlier year, with the Division 7A Calculator.
Benchmark interest rate by income year
Every rate below is the figure the ATO confirms for that income year (verified against the ATO's current benchmark-rate page and its archived editions), newest first.
| Income year | Benchmark rate |
|---|---|
| 2026-27 | 8.77% |
| 2025-26 | 8.37% |
| 2024-25 | 8.77% |
| 2023-24 | 8.27% |
| 2022-23 | 4.77% |
| 2021-22 | 4.52% |
| 2020-21 | 4.52% |
| 2019-20 | 5.37% |
| 2018-19 | 5.20% |
| 2017-18 | 5.30% |
| 2016-17 | 5.40% |
Rates for 2016-17 to 2018-19 were set by an annual ATO Taxation Determination (e.g. TD 2017/17 for 2017-18, TD 2016/11 for 2016-17); the ATO now confirms the rate directly on its benchmark-rate page instead of issuing a separate TD each year.
Frequently asked questions
What is the Division 7A benchmark interest rate for 2026-27?
The ATO-published Division 7A benchmark interest rate for the 2026-27 income year is 8.77%. It is the “Indicator Lending Rates – Bank variable housing loans interest rate” (the Reserve Bank's Housing loans; Banks; Variable; Standard; Owner-occupier rate) last published by the RBA before 1 July 2026, and it does not change even if the RBA later revises that published rate.
How is the Division 7A benchmark rate set?
Under Division 7A of Part III of the Income Tax Assessment Act 1936, the benchmark interest rate for an income year is the Reserve Bank's Indicator Lending Rate for bank variable housing loans (standard, owner-occupier) last published before the start of that income year. The ATO announces the confirmed figure each June for the income year starting the following 1 July.
What does the benchmark rate actually do?
It is the minimum interest rate a complying Division 7A loan must charge, and it is the rate used to calculate the minimum yearly repayment (MYR) on the loan. If a loan charges less than the benchmark rate for its income year, or the MYR is not met, the shortfall can be treated as an unfranked deemed dividend. Run your own numbers through the Division 7A Calculator, which uses this same table.
How far back does the benchmark rate go?
This table covers every income year from 2016-17 to 2026-27. Older years were set by an annual ATO Taxation Determination (for example TD 2017/17 for 2017-18); the ATO stopped publishing a separate TD once it began confirming the rate directly on its benchmark-rate page.
Does the rate change during the income year?
No. The benchmark rate for an income year is fixed at the RBA rate last published before that income year starts (1 July for a standard 30 June balancer), and it stays fixed for the whole year even if the RBA's published rate moves afterwards.
What if my company uses a substituted accounting period?
A company with an ATO-approved substituted accounting period uses the RBA rate last published before its own income year starts, not the standard 1 July date. This can produce a benchmark rate that differs from the table below for that company's income year.
Tax Accuracy & Sources
Reviewed: March 2026 · Tax year: 2026-27
Division 7A benchmark interest rates as published by the ATO. Actual minimum yearly repayment obligations depend on a loan's own opening balance, term and repayment history — use the calculator or seek professional advice for your circumstances.