Estimate the tax cost of an undocumented director loan, or model the minimum yearly repayments for a complying loan agreement
Division 7A treats an undocumented director loan as a dividend in the income year the company's tax return lodgment date passes without a complying loan agreement in place. The full loan amount is assessable income at your marginal rate. Deemed dividends are generally not frankable by law (s109ZB ITAA 1936) — the company cannot attach franking credits, and the payment does not affect the company's franking account. Franking is only possible in exceptional cases: where the ATO grants discretionary relief for an honest mistake or inadvertent omission, or where the dividend arises from a family law obligation. This calculator provides a general estimate only using 2025-26 tax rates. Seek professional advice before taking action.