Taxation Determination

TD 2012/15

Income tax: what is the benchmark interest rate applicable for the year of income that commenced on 1 July 2012 for the purposes of Division 7A of Part III of the Income Tax Assessment Act 1936 and how is it used?

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This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953.

A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes.

If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.


1. For the income year that commenced on 1 July 2012, the benchmark interest rate for the purposes of sections 109N and 109E of the Income Tax Assessment Act 1936[1] is 7.05% per annum.

2. This benchmark interest rate is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2012; and to trustee loans made after 11 December 2002 and before 1 July 2012. It is used to:

determine if a loan made in the 2011-12 income year is taken to be a dividend (paragraph 109N(1)(b) and as applicable, subsection 109D(1) or section 109XB); and
calculate the amount of the minimum yearly repayment for the 2012-13 income year on an amalgamated loan taken to have been made prior to 1 July 2012 (subsection 109E(5)).

3. This Determination only applies where a private company or trustee, which either made the loan or is taken to have made the amalgamated loan, has an income year that commenced on 1 July 2012. (Taxation Determination TD 2001/18 explains how to find the benchmark interest rate for private companies with substituted accounting periods).


4. A private company makes an unsecured loan of $100,000 to a shareholder on 1 July 2011. The loan is made under a written agreement which specifies that the rate of interest payable for all future years must equal or exceed that required by paragraph 109N(1)(b). The term of the loan is 5 years. For the year ended 30 June 2012, as all the requirements of section 109N are met, the loan is not treated as a dividend under Division 7A of Part III. No repayments were made before the private company's 'lodgment day' for the 2011-12 income year. Therefore, the minimum yearly repayment required for the 2012-13 year of income is calculated as follows:

5. If repayments made in the 2012-13 year of income equal or exceed the minimum yearly repayment, no amount is taken to be a dividend for the purposes of subsection 109E(1).

6. The 'lodgment day' is the earlier of the due date for lodgment and date of lodgment of the lender's income tax return for the income year in which the loan is made. The 'lender' is the private company or trustee which made the loan that is subject to Division 7A of Part III.

Date of effect

7. This Determination applies to the income year commencing on 1 July 2012.

Commissioner of Taxation
27 June 2012


All subsequent legislative references are to the Income Tax Assessment Act 1936 unless otherwise indicated.

Not previously issued as a draft


ATO references:

ISSN: 1038-8982

Related Rulings/Determinations:

TD 2001/18

Subject References:
benchmark interest rate
deemed dividends
private company distributions

Legislative References:
ITAA 1936
ITAA 1936 Pt III Div 7A
ITAA 1936 109D(1)
ITAA 1936 109E
ITAA 1936 109E(1)
ITAA 1936 109E(5)
ITAA 1936 109N
ITAA 1936 109N(1)(b)
ITAA 1936 109XB
TAA 1953

TD 2012/15 history
  Date: Version: Change:
You are here 27 June 2012 Original ruling  
  7 August 2019 Withdrawn