To use the Division 7A calculator, create a new binder selecting 'Company Debit Loan' - see the knowledge article: How to create a binder, for more information.

Note: Ensure you create a binder for the correct financial year that you wish to calculate the loan for. The date selected for the binder will automatically select the correct benchmark interest rate. This will also affect the interest rates used for the minimum repayments.

When the binder is opened in Excel, the 'D03 Company Debit Loan Summary' record template is automatically inserted into the binder. This acts as a summary worksheet for all Division 7a loans.

The Div7A Calculator worksheet determines the interest and minimum repayments for the financial year on shareholder loans.

To add the record template, 'G31 Div 7a Calculator', you have two options:

1. Add the record template against the loan directly and select the loan as the reconciliation field (recommended). For more information regarding how to add a record template, see the knowledge article: How to link various records to a binder.

Note: We recommend you choose to rollover the record template so when you are preparing the work next financial year, the loan balances will automatically rollover into the worksheet.

2. 'Accept' the recommendation in the Summary section of the index sheet. You will be prompted to name the worksheet - we recommend you use the name of the loan.

In the worksheet, enter the loan details:

Enter the dates and amounts in the 'Transactions for the Year' section in the worksheet.

Note: No interest is payable and no minimum repayment is required to be paid in the respect of the year the loan is made.

In the worksheet, enter the loan details:

Enter the balance of the previous year in the 'Sum of the Loans Made in FY2022 Year Before any Repayments were Made' line (if you did not elect to rollover last year), and any repayments made in the 'Transactions for the Year' section.

Note: It is essential that a lodgement date is input for this scenario. If any repayments are made prior to the lodgement date, while interest will still be charged, it will decrease the balance used to calculate the minimum repayment for the current year, hence reducing this amount.

In the worksheet, enter the loan details:

Enter the balance of the previous year in the 'Amount of the Loan Not Repaid by the End of the Prior Year' line (if you did not elect to rollover last year), and any repayments made in the 'Transactions for the Year' section.

The 'Minimum Repayment Calculator' section of the worksheet gives you the minimum repayment required for the current year, as well as future years based on the current year's interest rate.

WARNING: Each year must have it's own worksheet. You should NOT enter any transactions for the current year if you have entered a balance for any prior years.

To show a summary of all loans, navigate to 'D03 Company Debit Loan Summary' and right-click anywhere along the top of the task pane, clicking Refresh.

This will bring through the opening balance, payments made, interest, minimum repayments and the closing balance for each separate loan, as well as a total for all loans.

Given that the total of all dividends that can be paid under Division 7A during an income year is limited to its distributable surplus for that year, you may need to calculate the distributable surplus. To do this, insert the 'D06 Distributable Surplus' worksheet in the Summary Worksheets section of the index. Enter the relevant details into the 'Distributable surplus' section of the worksheet. There are notes below this section in the worksheet to describe the different line items.

Navigate to the relevant Accounts & Tax binder for the client and open it in Excel. As you would add any other record, select the plus icon to the right of the account.

The below pop-up screen will appear, select Link to External Value, External Field.

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Search for the relevant Company Debit Loan binder and select it.
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Select the relevant worksheet you wish to reference against the account.

Click on the reconciliation value.

The below pop-up will appear. Input the record title and confirm the reconciliation details are correct.

Select Save and Close.

This worksheet will populate against the loan account and show a green tick if the amounts reconcile.

To add other templates into your firm starter file, see the administrator article: How to add a firm record template.