How much is that Division 7A Loan Agreement REALLY costing clients? Even if you ignore the accounting fees for managing the process and the fees for the setting up of a proper loan agreement, how much does a Division 7A loan to a director or associate cost them over the term of the loan? The Division 7A Analysis Tool will help you work it out and provide a simple one page summary to your client to give them the choice or Pay Now or Pay more later. This calculator allows you to project an unsecured loan over seven years or less and enter estimated future benchmark interest rates and variable extra repayments. The minimum repayments are then topped up with a dividend that can be franked or unfranked and you get the choice of whether the interest paid on the loan agreement is deductible or not at the client’s marginal tax rate. Finally it analyses the tax payable by the lender AND the recipient for an accurate analysis of how much that loan will truly cost the client. The Division 7A Analysis Tool will take the guess work out of this calculation and give both adviser and client a sobering reminder of how much these Division 7A loans really cost.
