tmsfinancial logo
About Us
ServicesDropdown arrow icon
InsightsDropdown arrow icon
  • Articles
    • Browse our articles for tax news, practical tips on accounting, business structures, payroll, property taxes, SMSF, and tax compliance. Our content is designed to help small business owners and investors make informed financial decisions clearly and effectively.
      Read More
  • Webinar
    • Explore our collection of past webinars, featuring in-depth discussions on business structures and tax strategies tailored for small business owners looking to enhance their financial outcomes.
      Watch Videos
CalculatorsDropdown arrow icon
Tax ChecklistDropdown arrow icon
Schedule Consultation
tmsfinancial logo
Schedule Consultation

Streamline Your Finances with Division 7A Umbrella Loan Agreement

The primary goal of our Division 7A Solutions package is to provide business owners and shareholders with a streamlined approach to managing their finances while ensuring compliance with tax laws, specifically Division 7A of the Income Tax Assessment Act 1936. We understand the importance of adhering to these regulations while optimizing your financial strategies.

Why Division 7A Compliance Matters

Imagine a situation where you’ve borrowed money from your own company or have multiple loans in play. In such scenarios, having a Division 7A compliant loan agreement is essential for efficient and legal financial navigation. But what if we could make this process even simpler?

How it works

Our Division 7A Solutions Package equips you with the essential tools to simplify your financial management while staying compliant with Australian tax laws. Here’s what’s included

Division 7A Umbrella Loan Agreement

This single agreement efficiently manages multiple Division 7A loans within one comprehensive framework.

Deed of Promissory Note

Essential documentation for loan agreements, ensuring legal clarity and compliance.

Resolution by Directors to Pay Dividend and Set Off Shareholders Loan

Crucial for strategies like offsetting franked dividends against minimum loan repayments, optimizing your financial approach.

Deed of Endorsement of Promissory Note

Additional documentation for meticulous loan management.

Notice of Drawdown for New Loan

Streamlines the process of obtaining new loans, making it hassle-free.

Set-Off Against Loan

Ensures the efficient offsetting of dividends against loan repayments, improving your financial management.

Additional Set Off

Provides extra support to cover all your financial needs, offering flexibility and control.

Compliance with Tax Laws

Rest assured, our Division 7A Solutions package is fully compliant with the Income Tax Assessment Act 1936, giving you peace of mind.

Simplify Your Financial Journey

Managing finances and loans can be complex, but it doesn’t have to be. Our Division 7A Solution is your all-in-one tool for compliance and efficiency. Say goodbye to paperwork hassles and hello to streamlined financial management.

The Power of Division 7A Umbrella Loan Agreement

Our Division 7A Umbrella Loan Agreement is the cornerstone of our objective. It’s meticulously designed to simplify your financial management, whether you’re dealing with one loan or multiple loans. This comprehensive agreement eliminates the hassle of additional paperwork, ensuring complete regulatory compliance in the most efficient way possible.

Case Study

Adrian, a dedicated builder, operates his construction business through his company. In need of additional funds for personal purposes, he decided to borrow $500,000 from his own company. To ensure compliance with Division 7A tax regulations, Adrian set up a Division 7A complying loan agreement. As part of this agreement, there’s a minimum yearly repayment of approximately $85,000 due on 30 June. To meet this personal financial obligation efficiently, Adrian opted for a strategic approach: offsetting the minimum repayment against a fully franked dividend paid by his company to himself on 30 June 2022.
While the strategy seems straightforward, many individuals mistakenly believe that processing a journal entry alone is sufficient to demonstrate the offset and ensure compliance. This misconception can lead to potential issues, particularly during ATO reviews or audits, as there’s no concrete evidence to prove that the offset genuinely occurred by the deadline.
To navigate this challenge and guarantee compliance, Adrian implemented a well-thought-out strategy:

Calculate the Minimum Repayment: Adrian began by calculating the minimum repayment due on 30 June 2022.
Director’s Resolution: He obtained a director’s resolution, officially declaring the dividend by 30 June 2022 and confirming the company’s intention to offset it against the minimum repayment.
Deed of Offset: Adrian and his company entered into a deed of offset, clearly outlining their agreement to offset the dividend against the minimum yearly repayment. Both Adrian, as the individual shareholder and borrower, and the company’s director, signed this deed, and it was dated by 30 June 2022.
Post-30 June Actions: After 30 June, Adrian’s company issued a dividend statement/distribution statement to ensure proper framing of the dividend. This was done within the required timeframe of four months from the financial year-end (by 31 October 2022). Subsequently, the company processed the necessary journal entries to eliminate the repayment against the dividend.

Thanks to this meticulous strategy, Adrian successfully offset the fully franked dividend against the minimum yearly loan repayment within the stipulated timeframe. All financial records and documentation aligned with Division 7A compliance, providing a clear and irrefutable trail of the offset.
By following this strategy, Adrian minimized the risk of tax-related issues and deemed dividends that could have arisen in the absence of proper documentation. His tax compliance remained robust, reducing the likelihood of unfavorable outcomes during tax reviews or audits.
Adrian’s experience underscores the importance of precise documentation and adherence to Division 7A compliance guidelines. To simplify and ensure compliance in similar financial transactions, we recommend exploring our Division 7A Solutions package. This comprehensive package includes a Division 7A Umbrella Loan Agreement, essential documentation, and expert guidance to make Division 7A compliance efficient and secure.

Don’t leave your financial interests to chance. Protect your business and your compliance with Division 7A regulations. Contact us today
to learn more about our Division 7A Solutions and how they can benefit your business, just like they did for Adrian.

Conclusion

When it comes to Division 7A compliance and efficient financial management, our Division 7A Solutions package is your trusted partner. Don’t wait until tax season to get your finances in order. Invest in simplicity, compliance, and peace of mind today.

For more information and to get started, contact our Sydney CPA firm. We’re here to help you manage your finances effortlessly, just as we’ve been doing since ’93.

Ready to Resolve Your Division 7A Loan Challenges? Let's Take Action!

Our team of DIV7A specialists is here to provide you with personalized solutions. Start by completing the Division 7A Loan Assessment Form, and we'll evaluate your situation promptly. Your financial success is our priority.

ACT NOW

Start Tax Planning Now

Wondering how to withdraw money from your company while maximizing benefits and minimizing costs? It all starts with effective tax planning.

Start Now

Book an Appointment

Ready for Personalized Solutions? Schedule Your Appointment!

Book Now

Ready to explore our Division 7A Solutions package or have questions about Division 7A compliance?

Fill out the form below, and our experts will get in touch with you shortly.