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ATO Updates Benchmark Interest Rate for Private Company Loans to Shareholders — Orbitax Tax News & Alerts

The Australian Taxation Office (ATO) has updated the Division 7A – benchmark interest rate, which is used for determining required repayments of amalgamated private company loans to shareholders. If repayments do not meet or exceed the determined repayment amount, the difference between the required payment and the actual payment made is generally treated as a deemed dividend. The update provides that the benchmark interest rate for the income year ending 30 June 2023 is 4.77% (up from 4.52%), which is equal to the 'Indicator Lending Rates - Bank variable housing loans interest rate' published by the Reserve Bank of Australia on 2 June 2022. The update also provides the benchmark interest rates for prior income years going back to the income year ended 30 June 2018, as well as guidance on the applicable rate for substituted accounting periods (i.e., income year ending on a date other than 30 June). A Division 7A calculator and decision tool are also provided.