A Division 7A Loan Agreement is for use when a company is lending to a single borrower who is a director, shareholder or associate of a director or shareholder of that company. Section 109N (1) (a) in Division 7A of the Australian Income Tax Assessment Act 1936 sets out strict provisions and measures to ensure that private companies do not make tax free distributions of profits to shareholders or shareholders' associates in the form of payments, loans or forgiven debts. Having a written Division 7A Loan Agreement is crucial and will be valuable in the event of disagreements or misunderstandings.

Among others, this form includes the following provisions:

• Parties to the Agreement: This provision contains the identity and names of the parties entering into the loan agreement;
• Loan: This provision sets out the amount of the loan and the date given;
• Interest: This provision sets out the rate of interest for the loan;
• Repayment of Loan and Interest: This provision sets out the due date that the loan, together with interest, is payable;
• Default: This provision sets forth procedures in place in the event of default.

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2. Division 7A Loan Agreement for use in Australia

Law Compliance: This form complies with the state and territory laws of Australia