Division 7A Loan Agreement
A Loan Agreement is entered between a borrower and a lender which regulates the mutual promises made by both parties. It is a legal document regulating the details of a loan or a loan facility, the rights, and obligations of both borrower and lender. It usually requires both parties to obtain independent financial and legal advice, and execute the document in the presence of an authorised witness.
A loan from a private company to a shareholder or an associate of a shareholder may be deemed to be a dividend unless the criteria under Income Tax Assessment Act 1936 (Cth) are met. Without a compliant loan agreement, the loan may become assessable income for the shareholder. In other words, the shareholder will need to pay tax on that amount.
By completing the form below, you can choose either a secured or unsecured Loan Agreement that complies with Division 7A of the Income Tax Assessment Act 1936 (Cth).
If you need any assistance, please feel free to contact our experienced commercial law team. Our team has acted for individuals in relation to mortgages and personal loans. We have also represented companies – large and small.