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Division 7A benchmark interest rate

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Taxation Determination TD 2013/17 states that for the income year that commenced on 1 July 2013, the benchmark interest rate for the purposes of ss 109N and 109E of the Income Tax Assessment Act 1936 is 6.20% (down from 7.05% per annum for 2012–2013).

The benchmark interest rate is relevant to private company loans made or deemed to have been made after 3 December 1997 and before 1 July 2013, and to trustee loans made after 11 December 2002 and before 1 July 2013. It is used to:

  • determine if a loan made in the 2012–2013 income year is taken to be a dividend (s 109N(1)(b) and, as applicable, s 109D(1) or s 109XB); and

  • calculate the amount of the minimum yearly repayment for the 2013–2014 income year on an amalgamated loan taken to have been made prior to 1 July 2013 (s 109E(5)).

The Determination also states that for private companies with substituted accounting periods, Taxation Determination TD 2001/8 applies.

Source: Taxation Determination TD 2013/17, http://law.ato.gov.au/pdf/pbr/td2013-017.pdf.

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