Show download pdf controls
  • Division 7A – benchmark interest rate

    Find the benchmark interest rate and calculator and decision tool for Division 7A loans made by private companies.

    On this page

    Benchmark interest rates

    Under Division 7A of Part III of the Income Tax Assessment Act 1936, the 'benchmark interest rate' for an income year is the 'Indicator Lending Rates – Bank variable housing loans interest rate'. This is the 'Housing loans; Banks; Variable; Standard; Owner-occupier' rate last published by the Reserve Bank of AustraliaExternal Link before the start of the income year. The benchmark interest rate for an income year does not change if the Reserve Bank of Australia later revises its published rate after the start of the income year.

    Current and past benchmark interest rates

    These rates apply to private companies with an income year ending 30 June.

    A private company that meets certain requirements may adopt an income year ending on a date other than 30 June – a substituted accounting period. Those companies will need to determine the relevant rate.

    Benchmark interest rates – 2018 to 2023 income years

    Income year ended 30 June

    %

    ATO reference

    2023

    4.77%

    This is the 'Indicator Lending Rates - Bank variable housing loans interest rate' published by the Reserve Bank of Australia on 2 June 2022.

    2022

    4.52%

    This is the 'Indicator Lending Rates - Bank variable housing loans interest rate' published by the Reserve Bank of Australia on 2 June 2021.

    2021

    4.52%

    This is the 'Indicator Lending Rates - Bank variable housing loans interest rate' published by the Reserve Bank of Australia on 2 June 2020.

    2020

    5.37%

    This is the ‘Indicator Lending Rates - Bank variable housing loans interest rate’ published by the Reserve Bank of Australia on 4 June 2019.

    Note: Annual Taxation Determinations for the benchmark interest rate are no longer published.

    2019

    5.20%

    TD 2018/14

    2018

    5.30%

    TD 2017/17

    Substituted accounting period

    If a private company has adopted a substituted accounting period, the applicable benchmark interest rate is the 'Housing loans; Banks; Variable; Standard; Owner-occupier' rate last published by the Reserve Bank of AustraliaExternal Link before the start of the private company's substituted accounting period.

    Example 1

    Company ABC has a substituted accounting period starting on 1 November 2016. According to the RBA website, the last interest rate published before 1 November 2016 was for September 2016 and recorded to be 5.25%. The benchmark interest rate for Company ABC's income year commencing 1 November 2016 is 5.25%.

    End of example

     

    Example 2

    Company XYZ has a substituted accounting period starting on 1 May 2016. According to the RBA website, the last interest rate published before 1 May 2016 was for March 2016 and recorded to be 5.65%. The benchmark interest rate for Company XYZ's income year commencing 1 May 2016 is 5.65%.

    End of example

    Division 7A calculator and decision tool

    Access the Division 7A calculator and decision tool.

    This tool will help you determine the effects and your obligations on Division 7A – Loans by private companies.

    Last modified: 04 Jul 2022QC 17928