Company Debit Loan (Division 7A)

The Division 7A starter is designed to calculate the minimum yearly repayments on a shareholders loan, or an unpaid present entitlement to a trust, as well as to calculate the company’s distributable surplus.


To use the Division 7A calculators, download the starter file from the Smart Suite website or open from HowNow Knowledge. Make sure the date on the Home sheet is the correct year that you wish to calculate the loan for.




Division 7A calculator


The Div7A Calculator worksheet determines the interest and minimum repayments for the financial year on shareholder loans.


In the Division 7A & UPE Held on Sub-Trust section of the Index sheet, insert the 'D07 Div 7A Calculator' worksheet. Change the name of the loan on the Index in the Worksheet Title column. This name will flow through to the Loan details section of the worksheet.



In the worksheet, enter the loan details, including whether this was the first year the loan was made or the year afterward. The date entered on the Home sheet will automatically select the correct benchmark interest rate. This will also affect the interest rates used for the minimum repayments.


If the loan commenced during the current financial year:

Enter the dates and amounts in the Dates and Drawdowns column in the Transactions for the year section. Also enter the term of the loan in years (either 7 or 25) in row 44 of the Year loan was made section.



If the loan commenced in the previous year:

Enter the balance of the previous year, along with any repayments made prior to the lodgement date of the company’s tax return in rows 41-42 of the Year loan was made section. Also enter the term of the loan in years (either 7 or 25). 



If it was the second or subsequent year after the loan was made:

Complete the details in rows 51 and 52 of the Second and subsequent years section. Then enter any repayments, including the minimum repayment, into the Transactions for the year section.



The Minimum repayment calculator gives you the minimum repayment required for the current year, as well as future years based on the current year's interest rate.



Note: Each year must have it's own worksheet. You should NOT enter any transactions for the current year if you have entered a balance for any prior years.




UPE Repayment calculator


This worksheet calculates the loans described in PS LA 2010/4 Section 3 loans – a UPE held on a sub-trust.


In the Division & 7A UPE Held on Sub-Trust section of the Index sheet, insert the 'D08 UPE Repayment Calculator' worksheet. Change the name of the loan on the Index in the Worksheet Title column. This name will flow through to the UPE details section of the worksheet.


In the UPE details section of the worksheet, select the correct UPE name from the dropdown menu if it hasn’t automatically selected. Choose which Investment option that you wish to use from PS LA 2010/4. The worksheet allows for the first two options:

  • Option 1 - an interest only 7 year loan using the ATO’s benchmark interest rate
  • Option 2 - an interest only 10 year loan calculated using the prescribed interest rate


Enter the start date of the loan into row 35. If the loan is in its last year, you will get a message letting you know that the principal must also be repaid in that year.


Enter the amount advanced during the year or the opening balance from the previous year. Any repayments get entered into the Repayments for the year section.



The interest payments are calculated in the Interest payment calculator section. Any future years interest calculation is an estimate only, as the interest rate is based on the current year interest rate as future interest rates are unknown.




Loan summary


To show a summary of all loans, click the Refresh Summary button on the Index. This will bring through the opening balance, payments made, interest, and the closing balance for each separate loan, as well as a total for all loans.




Distributable surplus


Given that the total of all dividends that can be paid under Division 7A during an income year is limited to its distributable surplus for that year, you may need to calculate the distributable surplus. To do this, insert the 'D06 Distributable Surplus' worksheet in the Distributable Surplus section of the Index. Enter the relevant details into the Distributable surplus section of the worksheet. There are notes below to describe the different line items.




Templates available in the Division 7A starter


ReferenceNameSection
D01
Company Debit Loan ChecklistJob Management
D02
Debit and Equity ChecklistJob Management
A01Matters for PartnerJob Management
A02Items ForwardJob Management
A05Review PointsJob Management
A06Client QueriesJob Management
A10Matters for ClientJob Management
A13Workpaper Items
Job Management
D06Distributable SurplusDistributable Surplus
D07Div 7A CalculatorDivision 7A & UPE Held on Sub-Trust 
D08UPE Repayment CalculatorDivision 7A & UPE Held on Sub-Trust
Z01Spare Worksheet - BlankALL
Z02Spare Worksheet - ListALL


To add other templates into your firm starter file, please see the Smart Workpaper Customisation guides.


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