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 calculator, 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 'G31 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

  • whether the loan is secured or unsecured
  • the term of the loan (maximum of 25 years or 7 years for any other loan>
  • whether this is 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. 

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 the Year loan was made section. 

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

Complete the details in 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.

WARNING: 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

WARNING: This worksheet only applies where a sub-trust has been created for the UPE which arose prior to 1 July 2022 in accordance with PS LA 2010/4. From 1 July 2022 interest-only complying sub-trust arrangements will no longer be accepted.

In the Division & 7A UPE Held on Sub-Trust section of the Index, 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 the relevant Investment option used 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. 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

Company Debit Loan ChecklistJob Management
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
Div 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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