Division 7A Benchmark Interest Rate - TD 2013/17

The rate for the 2013/14 financial year is 6.20%.  The rate for the previous financial year was 7.05%.

The Division 7A benchmark rate is relevant to SMSFs which have entered into limited recourse borrowing arrangements, where the trustee of the SMSF is a shareholder of the lender, or a member of the fund is a shareholder or an associate of a shareholder of the lender. This includes where a discretionary trust makes a loan to the fund, that trust has a corporate beneficiary with an unpaid present entitlement and a member of the fund is also a shareholder of that corporate beneficiary.

Essentially, such loans must be properly documented and bear interest at a rate equal to or exceeding the then relevant Division 7A benchmark rate.