Minimum yearly repayment on a $250,000 previous year-end balance for 2026-27, using the ATO-published 8.77% benchmark rate.
2026-27Unsecured · 7 years remaining
Full loan breakdown
Previous year-end balance
$250,000
Loan type
Unsecured
Remaining term used
6 years
Benchmark rate
8.77%
Minimum yearly repayment
$55,348
What this loan size means
At $250,000, this is a substantial Division 7A loan — the $55,348 minimum yearly repayment is significant, and a missed repayment creates a large deemed-dividend exposure.
If the $55,348 minimum repayment is missed, the shortfall can become an unfranked deemed dividend taxed at the shareholder's marginal rate — up to $26,014 of extra tax at the top 47% rate on this year's repayment alone, with no franking credit to offset it.
A Division 7A loan can arise when a private company lends to a shareholder or associate. This example calculates only the 2026-27 MYR; future MYRs cannot be known until the ATO publishes each future benchmark rate.
Why this example matters
Division 7A requires the minimum repayment to be made by 30 June each year. If the repayment is missed, the shortfall can be treated as an unfranked deemed dividend rather than a simple loan shortfall.
What is the minimum yearly repayment on a $250,000 Division 7A loan?
For a $250,000 previous year-end balance on an unsecured Division 7A loan made in 2024-25, the estimated 2026-27 minimum yearly repayment is $55,348 using the ATO-published 8.77% benchmark rate and 6 remaining years.
What happens if I miss the repayment on a $250,000 Div 7A loan?
If the minimum yearly repayment is not made by 30 June, the shortfall can be treated as an unfranked deemed dividend and taxed at the shareholder's marginal rate. On this $250,000 loan that is up to $26,014 of extra tax at the top 47% marginal rate.
Is interest on a Division 7A loan tax deductible?
The benchmark interest charged on a Division 7A loan is assessable income to the company but is generally only deductible to the borrower if the borrowed funds are used to produce assessable income. A loan used for private purposes gives no interest deduction.
Can I use a longer term than 7 years for a $250,000 Div 7A loan?
A maximum 7-year term applies to unsecured Division 7A loans. A 25-year term requires the whole loan to be secured by a registered mortgage over real property and the property's market value less prior-ranking secured liabilities to be at least 110% of the loan when it is made.