The benchmark interest rate for the income year ending 30 June 2021 for Division 7A purposes is now 4.52 per cent.
The rate is based on the “Indicator Lending Rates - Bank variable housing loans interest rate” published by the Reserve Bank of Australia.
The previous rate was 5.37 per cent for the 2019–20 income year.
The new interest rate has now been made publicly available on the ATO’s website, and comes after the Tax Office announced last year that it would no longer publish eight of its 12 annual taxation determinations.
Instead, it will only make the information available on the ATO website, in a move that it claims will improve the timeliness of publishing this information and provide easier, simpler and quicker access to the information.
Other Div 7A changes
The latest benchmark interest rate change comes after the ATO announced an extension to minimum yearly repayments for borrowers, providing them until June 2021 to make their 2019–20 repayments.
The government also announced that the start date for targeted amendments to Division 7A would now be revised from 1 July 2020 to “income years commencing on or after the date of royal assent of the enabling legislation”.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.