Division 7A loan agreement template — compliant sample.

Identifies the lender (the private company, with its ACN) and the borrower (the shareholder or their associate). Names the underlying relationship that triggers Division 7A — shareholder, family-trust beneficiary, related entity. Required because the Division applies only to identified categories of recipient under s109C, s109D.

States the principal loan amount, the date of the loan, and the drawdown arrangements. The "date of the loan" is the date the funds were first transferred — important because this determines which year of income the loan falls in and therefore which lodgement-day deadline applies for the agreement.

Specifies the maximum loan term — 7 years if unsecured, or 25 years if secured by a registered mortgage over real property under s109N(3)(b). If the 25-year secured term is used, this clause cross-references the security arrangements in clause 6. The shorter term smooths the deemed-dividend risk faster but produces a higher minimum yearly repayment.

References the ATO Division 7A benchmark interest rate "as published from time to time" — so the rate floats with each year's ATO publication without needing the agreement to be amended each year. Best practice is to name the benchmark rate as the floor; the parties may agree to a higher rate, but never lower than benchmark. See the rate explainer for the current FY26 rate and how the ATO publishes annually.

Obliges the borrower to make at least the minimum yearly repayment computed under s109N by 30 June of each test year. The clause typically references the s109N formula rather than fixing a $ figure — because the MYR recomputes each year based on the year's balance, that year's benchmark rate, and the remaining term. The calculator shows the year-by-year amortisation that this clause obligates.

If the loan uses the 25-year secured term, this clause specifies the security property, the priority of the company's mortgage relative to other registered interests, and the lodgement of the mortgage with the relevant Land Titles Office. Omitted on unsecured loans.

Defines events of default (missed MYR, borrower insolvency, breach of any clause) and the lender's rights on default — typically including acceleration of the full outstanding balance plus accrued interest. Not strictly required for Division 7A compliance, but essential for the company's commercial position if the borrower defaults.

Signature blocks for the lender (private company, signed by a director under the Corporations Act execution provisions) and the borrower (in the case of a corporate borrower, two directors or director + secretary). A witness block is recommended for evidential strength. Most critically, the execution date must be before the company's tax-return lodgement day for the year of income in which the loan was made.