The Australian Taxation Office has increased the Division 7A benchmark interest rate for the income year ending 30 June 2027, while also updating historical rates, guidance for substituted accounting periods, and Division 7A calculation tools. 

RF Report

The Australian Taxation Office (ATO) has updated the Division 7A benchmark interest rate used to calculate the minimum repayments required for amalgamated private company loans to shareholders on 1 July 2026.

If the required repayment is not met, the shortfall is generally treated as a deemed dividend.

The ATO has set the Division 7A benchmark interest rate at 8.77% for the income year ending 30 June 2027, based on the Reserve Bank of Australia’s variable housing loan rate published on 6 June 2026. This is an increase from 8.37% for the previous income year ending 30 June 2026.

Under Division 7A of the Income Tax Assessment Act 1936, the benchmark interest rate for an income year is based on the Reserve Bank of Australia’s standard variable home loan rate for owner-occupiers, as published before the start of that income year. Once set, the benchmark rate remains unchanged for the year, even if the Reserve Bank later revises the published rate.

The update also includes benchmark interest rates for prior income years back to 2021, guidance for substituted accounting periods, and access to a Division 7A calculator and decision tool.