Overview

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.

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.

Using the Division 7A calculator worksheet

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.

If the loan commenced during the current financial year (e.g. year of the loan)

In the worksheet, enter the loan details:

whether the loan is secured or unsecured
the income year of the loan
the term of the loan (maximum of 25 years or 7 years for any other loan)
the balance per the ledger.

Enter the dates and amounts in the Dates and Drawdowns column in the Transactions for the Year section.

Note: No interest is payable and no minimum repayment is required to be paid in the respect of the year the loan is made.

If the loan commenced in the previous year (e.g. 7 years remaining term)

In the worksheet, enter the loan details:

whether the loan is secured or unsecured
the income year of the loan
the term of the loan (maximum of 25 years or 7 years for any other loan)
the sum of the loans made in FY2022 year before any repayments were made
the lodgement date, if applicable
the balance per the ledger.

Enter the balance of the previous year in the 'Sum of the Loans Made in FY2022 Year Before any Repayments were Made' line, and any repayments made in the Transactions for the Year section.

Note: It is essential that a lodgement date is input for this scenario. If any repayments are made prior to the lodgement date, while interest will still be charged, it will decrease the balance used to calculate the minimum repayment for the current year, hence reducing this amount.

If it was the second or subsequent year after the loan was made (e.g. 6 or less years remaining term)

In the worksheet, enter the loan details:

whether the loan is secured or unsecured
the income year of the loan
the term of the loan (maximum of 25 years or 7 years for any other loan)
the amount of the loan not repaid by the end of the prior year
the lodgement date, if applicable
the balance per the ledger.

Enter the balance of the previous year in the 'Amount of the Loan Not Repaid by the End of the Prior Year' line, and any repayments made in the Transactions for the Year section.

Minimum repayments

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.

Using the UPE repayment calculator worksheet

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.

Using the loan summary feature

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.

Using the distributable surplus worksheet

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

REFERENCE	NAME	SECTION
D01	Company Debit Loan Checklist	Job Management
D02	Debit and Equity Checklist	Job Management
A01	Matters for Partner	Job Management
A02	Items Forward	Job Management
A05	Review Points	Job Management
A10	Matters for Client	Job Management
A13	Workpaper Items	Job Management
D06	Distributable Surplus	Distributable Surplus
G31	Div 7A Calculator	Division 7A & UPE Held on Sub-Trust
D08	UPE Repayment Calculator	Division 7A & UPE Held on Sub-Trust
Z01	Spare Worksheet - Blank	ALL
Z02	Spare Worksheet - List	ALL