Division 7A Interest Rates by Income Year 2026

The Division 7A interest rate is 8.37% for the 2025–26 income year and 8.77% for 2026–27. Match the benchmark to the income year in your loan schedule. A reference to “2026” alone can point you to the wrong rate.

Division 7A Benchmark Rates by Year

The Australian Taxation Office (ATO) publishes each Division 7A benchmark interest rate against the income year’s ending year. For a company using the standard Australian financial year, the published rates are below.

ATO income-year label	Financial year	Benchmark interest rate per annum
2023	2022–23	4.77%
2024	2023–24	8.27%
2025	2024–25	8.77%
2026	2025–26	8.37%
2027	2026–27	8.77%

These figures come from the ATO’s Division 7A benchmark rate table. The rate stays fixed for its income year even if the Reserve Bank of Australia changes the underlying housing loan rate during that year.

Use the financial-year label when saving the rate or asking a colleague to review it. The 2026 rate in the ATO table applies to 2025–26. The 2026–27 rate belongs to the ATO’s 2027 row.

If the company uses a substituted accounting period, determine the benchmark for that period under the ATO’s linked guidance. The standard-year table cannot establish the company’s applicable rate on its own.

Apply the Rate to the Loan

Use the benchmark for the income year being calculated, even when the loan started in an earlier year. For income years after the loan was made, a complying agreement must provide for interest at least equal to that year’s benchmark. Check the agreement’s interest terms if it charges a higher rate.

In this hypothetical example, a loan has an opening balance of $100,000 for 2025–26. Assume the agreement charges the benchmark rate and the balance stays unchanged until a repayment at year-end. The annual interest is $100,000 multiplied by 8.37%, which equals $8,370.

At 8.77%, the same unchanged balance would produce $8,770 in annual interest. The rate difference changes the interest by $400. This isolates the rate’s effect. An actual loan’s next opening balance also changes with its repayments.

Repayment timing can change the interest payable because the outstanding balance changes during the year. Keep each repayment’s date and amount with the loan record. The ATO’s calculator guidance explains the inputs and the relationship between benchmark interest and agreement terms.

The interest amount is one part of the yearly repayment. The minimum yearly repayment also includes principal and depends on the loan’s remaining term. Applying the benchmark alone does not establish that the borrower has met the yearly repayment requirement.

Before preparing the schedule, use the Division 7A exposure review to check which company-client balances need loan documentation.

When the Rate is Missing

A blank rate needs a check against the ATO table before you use the schedule. First identify the income year and the company’s accounting period. Then compare the practice’s saved rate with the published figure for that year.

If the ATO has published the rate, enter it against the correct year and recalculate the affected schedule. If the year is future and its benchmark is unpublished, keep any planning assumption separate from the published-rate record. Do not carry the previous year’s rate forward as an established benchmark.

The ATO’s calculator cannot calculate minimum yearly repayments for future years whose benchmark is unavailable. A loan’s term can extend beyond the published-rate table, so a full-term schedule still needs each later benchmark as it becomes available.

How Tax Genie Uses Benchmark Rates

Your practice adds each year’s published benchmark rate once in Tax Genie. The saved rate supplies that year’s calculations across the practice’s loan schedules, so staff can keep the rate consistent across client files.

Staff enter the lender and borrowers, the advances and the loan term, or a starting balance for an existing loan. Tax Genie builds the full-term schedule for a 7-year unsecured or 25-year secured loan. Each yearly row shows the opening balance, interest, minimum yearly repayment and closing balance.

Tax Genie flags missing benchmark rates in the overview. Use that flag to find the year needing a rate before relying on its repayment figure. A future row needs its published benchmark before it can supply a confirmed calculation.

After entering a published rate, review the affected yearly row alongside the recorded repayments. Confirm that the year matches the ATO table and that the repayment records explain the closing balance.