Division 7A Company Loan Agreement

When to Use This Agreement

The Division 7A loan agreement is used whenever a private company lends money to its directors, shareholders or associates of it's directors or shareholders.

Division 7A of the Income Tax Assessment Act 1936 (the Act) automatically treats payments, loans and debts forgiven by private companies to shareholders and shareholders’ associates as assessable dividends.

Division 7A sets out strict provisions that ensure private companies are restricted from making tax free distributions of profits to its directors and shareholders in the form of loans.

The Act makes it crystal clear that such loans must be approved by the company and the borrower. Furthermore the agreement between the parties must be in writing and cover defined criteria of the loan. These include details such as the minimum interest rate and the maximum term of the loan.

Our Div 7A company loan agreement is a formal agreement prepared and signed by the company and the borrower. It ensures compliance under section 109N of the Act and protects your company from being deemed by the ATO to have given money to the borrower, disguised as a loan.

Your professionally drafted, easy to use Division 7A Company Loan Agreement is available for immediate download. The document comes to you as a Microsoft Word and PDF template that can be used as often as you like. Simply insert the correct information in the appropriate field and tab to the next. Now print your professional and legally binding contract!

This Div 7A Company Loan Agreement includes the following Provisions -

• The names of the parties and a statement that the parties have agreed to the loan terms
• The Loan amount
• Date the loan is drawn down
• Period of the loan or the term
• Interest rate payable
• Date the written agreement was made.
• Default and consequences
• Power of attorney
• Governing Law
  

Sample Document Excerpt

 

 

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