What is Division 7A?
Tax-specific. A plain-English definition for Australian business owners.
Division 7A of the Income Tax Assessment Act 1936 deems certain loans, payments, and forgiven debts from private companies to shareholders or their associates to be unfranked dividends.
The rules are designed to prevent shareholders from extracting company profits as loans rather than dividends. Compliance requires formal loan agreements, minimum interest rates, and structured repayments — areas where SMEs frequently get caught out at audit.
In a connected back office this sits with the Finance hub, where Valont runs bookkeeping, managed payroll and bas & tax compliance for Australian SMEs as one team. The full definition set is on the glossary.
Talk to an Advisor
General information, not advice. For how this applies to your business, talk it through with a Trusted Advisor or start with the Business Health Check.