Division 7A Loan Agreement
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You can use Cleardocs to create a 'Division 7A' Loan Agreement. That sort of agreement covers the situation in which a company makes a loan:
- to a shareholder or shareholders of that company; or
- to an associate of a shareholder of that company - the term 'associate' has the same meaning as in Division 7A of the Income Tax Assessment Act 1936.
Why consider arranging a 'Division 7A' Loan Agreement?
Below, we set out some of the advantages of having a 'Division 7A' Loan Agreement in place. However, before you decide to arrange one, you should get legal advice. We cannot give you that advice. As we do not know your company's situation, you need to remember that the summary below is for information purposes only.
If you borrow money from a Pty Ltd company without this agreement in place before the money is taken, the ATO deems the money to be 'unfrankable dividends' and taxes the 'loan' very unfavourably.
With the agreement in place, you can avoid this situation in case money ever needs to be borrowed for personal use from the company in the future.
How long does the process take?
Creating the document takes less than 5 minutes. You can download the documents immediately.
Questions or further information
If you have questions:
- about how to use Cleardocs, contact the Cleardocs helpline on 1300 307 343.
- about legal issues, contact the Cleardocs helpline on 1300 307 343. If you need advice, we will arrange for you to speak with a lawyer at Maddocks. The firm provides a free legal helpline in relation to the documents Cleardocs provides. If you require other legal advice in relation to your particular circumstances, then this will be charged for.
