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This is the Division 7A loan agreement to be used where the company is lending to a single borrower who is a natural person and that person is a director, shareholder or associate of a director or shareholder of the company.
It is for the purposes of complying with Section 109N of the Income Tax Assessment Act 1936 (cth) which sets out strict provisions relating to such loans. Our LAWLIVE® document is drafted to ensure compliance with the relevant provisions so that the loan may not be deemed to be a dividend and any amendment made to this document may mean that the loan is deemed to be a dividend.
On 2 July 2008 the Australian Taxation Office (ATO) issued Taxation Determination 2008/19 which set the benchmark interest rate for the income year commencing on 1 July 2008 at 9.45 percent for the purposes of Section 109N: see ATO website www.ato.gov.au.
This loan agreement includes the following provisions:
1. Borrower's acknowledgement of the loan;
2. Time for repayment of the loan, having regard to the requirements of the Income Tax Assessment Act 1936 (cth);
3. Early repayment right;
4. Interest on the loan;
5. Default by Borrower;
6. Whole Agreement between the parties.
7a Loan Agreements are also known as; form 7a, rule 7a, loan 7a, division 7a, division 7a loan, division 7a loans, division 7a interest, 7a loan agreement, loan agreement, 7a agreement, 7a loan.
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