$50,000 Division 7A Loan Repayment Example
Minimum yearly repayment on a $50,000 unsecured Division 7A loan for 2026-27, using the 8.77% benchmark rate and a 7-year term.
| Loan amount | $50,000 |
|---|---|
| Loan type | Unsecured |
| Loan term | 7 years |
| Benchmark rate | 8.77% |
| Minimum yearly repayment | $9,858 |
| Interest component (year 1) | $4,385 |
| Principal component (year 1) | $5,473 |
| Closing balance after year 1 | $44,527 |
At $50,000, this is a mid-sized Division 7A loan — missing the $9,858 minimum repayment would expose the shortfall to deemed-dividend treatment at the shareholder's marginal rate.
If the $9,858 minimum repayment is missed, the shortfall can become an unfranked deemed dividend taxed at the shareholder's marginal rate — up to $4,633 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 arises when a private company lends to a shareholder or their associate. To avoid the amount being treated as a dividend, it must be on a complying agreement charging at least the 8.77% benchmark rate and repaid over a maximum 7-year unsecured (or 25-year secured) term.
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.
Compare nearby loan sizes: $50,000, $100,000, $200,000, and $500,000. Need a custom result? Use the Division 7A Calculator to change the loan amount, loan type, and financial year.