Overview

The purpose of this tool is to calculate the minimum repayments and associated interest in regard to any client's Division 7A Loans in a simple, easy use to format, collating all Div7A loans together in one place. Where connected to a cloud accounting package (like Xero) within AccountKit, you can then reconcile the calculation schedule with your ledger before posting the applicable journals for interest and dividends each year.

Here's a short video to give you a feel for how the Division 7a Tool works. Share it with the whole team to get them up to speed in no time!

We do not carry out any checks as to the status of a Division 7A loan. It is assumed that you have reviewed the circumstances of the loan in question in line with legislation and ATO guidance. This calculator simply calculates the minimum repayments and associated interest (and prepares the applicable journals) on the assumption that you have done the appropriate research and come to your own conclusions as to the status of any loan.

Please Note: At this point, we don't support any of the options under a sub-trust arrangement; Once the changes for Division 7A have passed royal ascent, we will make the required changes and feature additions ready for when you need to start doing your calculations. Although presently time frames have been delayed by the advent of Covid-19. We will keep you posted on any changes.

For more information on Division 7A, please see the following link:

https://www.ato.gov.au/Business/Private-company-benefits---Division-7A-dividends/In-detail/Division-7A---Loans/

New User Interface Jump straight to the applicable section:

The Division 7A list page
General variables & input fields
Before you start...
- Practice Settings
How to create a Division 7A schedule
- Non-Connected schedule
- Connected schedule
Other functions & options

Legacy User Interface Jump straight to the applicable section:

The Division 7A list page
General variables & input fields
Before you start...
How to create a Division 7A schedule
- Non-Connected schedule
- Connected schedule
Other functions & options

New User Interface

The Division 7A List Page

Area		Description
1	Add new Division 7A Schedule	Select this to start the process of creating a brand new division 7a schedule.
2	Balance at	Balance at: Selecting this updates the balance of the schedules within the table below so you can see what the balances are meant to be at the end of the selected financial year; It defaults to the last completed financial year.
3	Group by, Filter, View Select, Actions	These are part of Shared Elements
4	The list...	This is a snapshot of all current Division 7a Schedules running within your practice and their current status. Checkbox - Enables you to select multiple schedules to delete, archive, unarchive or post bulk journals. Client Name - This is the client entity that the Div7a loan belongs to. Description - This is a free text field in the event you would like to enter a basic description as to how the loan came into existence or any other useful information. (optional) Year of Loan - Identifies the year the loan was established Initial Balance – This is the original establishing balance for the loan. Type & Term – Identifies the applicable type (secured v's unsecured) and applicable duration of the loan. Balance - Identifies the expected balance as at the end of the selected "Balance at" financial year. Status – This identifies whether the Xero ledger is in balance with the calculation worksheet for the selected "Balance at" financial year.
5	Actions Column	These are the actions available to you for each division 7a schedule line. Link - allows you to link to the appropriate folder within your DMS. 3 Dot Menu - appears on mouseover at the end of the row. Edit - Selecting this will open the finance schedule for editing. Go to summary - This takes you to the summary tab for the selected company. Archive - Selecting this will open the finance schedule for editing. Delete - Selecting this will open the finance schedule for editing.

General Variables & Input Fields

The Setup & Settings Area

Variable Name		Description
1	Client & Loan Details	This area appears upon setup and when you select the above "Edit Schedule" option in the Actions menu: Client Name - This is the client entity that the Div7a loan belongs to. Sync with Xero - This gives you the option as to whether you want to reconcile the calculation schedule with the Xero ledger and post journals for dividend and interest into Xero. Refresh Accounts List - Forces a refresh of the chart of accounts from Xero. Year of Loan - Identifies the year the loan was established Type – Identifies the applicable type (secured v's unsecured) and applicable duration of the loan. Description - This is a free text field in the event you would like to enter a basic description as to how the loan came into existence or any other useful information. (optional) Account Select - Only applicable where "Sync with Xero?" is selected; Here you choose the default accounts for the loan's balance sheet, Interest and dividend accounts. Establishing Balance – This is the original establishing balance for the loan. (You can enter the conversion balance here if you wish, then don't edit the years prior to the conversion balance on the next screen) Conversion Year - Identifies which year you would like AccountKit to commence calculating the minimum repayments and dividends typically the end of the last financial year. Dividend Default Date - Defines the default date for the dividend; This can be overwritten at the point of preparing the journal from the summary tab.
2	Link documents	Like everywhere within AccountKit, this is where you can link back to a source document should you have a DMS connected to AccountKit. See here for more details.
3	Full Screen, Minimise, Close	These are part of Shared Elements
4	Add to workflow, linked documents, tags, collaboration, audit history	These are part of Shared Elements

The Summary Tab

The summary tab highlights all the relevant details for all current Division 7a loans across your clients' private companies. It also provides an opportunity to post entries to Xero to reconcile the calculation work paper with the Xero ledger.

Area		Description
1	Company Name	This identifies the current company name that the division 7a schedule belongs to. If you select this, you can switch to a different company.
2	Compare balance at...	This drop-down enables you to select which year the schedules are checking the status of in or out of balance within the table. By default, it'll use the last completed financial year. This is ONLY* available when your loan is connected to Xero.*
3	Actions Menu	This area identifies the core elements of the division 7a schedule: Export to - Used to export to Excel (there is no option for PDF for this report. By exporting to Excel, you can manipulate the layout to make it fit as required to a PDF export from Excel) More Features coming soon.
4	Loan Tabs	The tabs available in this view are broken into two distinct areas: <- & -> Arrows - Where you have lots of schedules, this enables you to scroll left and right between schedules off-screen; Holding the <Shift> key whilst scrolling the mouse will scroll left and right. (+) Icon - Create a new loan without having to return to the list page. Summary – This tab is an overview of all the current Division 7a loans at play including the balances, interest and repayments. From here you can review and be connected to Xero, and post your interest and dividend journals. See below Year (eg. 2017/18) – Each of these tabs includes the detail surrounding each of the Division 7a loans including the breakdown by financial year for interest and repayments. This is where the majority of your work will be in accounting for repayments and reconciling the calculation schedule with your ledger. Description Icon - Hovering over this icon shows the description for the highlighted loan.
5	Show forecasted values	By selecting this option, for future years where there isn't yet a benchmark interest rate, we will project potential interest and dividends based on the last released rate. See here for more info.
6	Link	This enables you to link back to a source document should you have a DMS connected to AccountKit. Specifically any documentation in relation to the selected year's loan.
7	Financial Year	This column identifies the following information The applicable financial year The associated benchmark interest rate for the financial year. Next to the financial year, you will find the available actions Settings - selecting this will enable you to increase the dividends above the minimum mandatory repayment and identify where to allocate the extra credit. Only available where the years journals are ready to post (ie. green plane icon) Post Journal - Once ready to post, press this to preview the final journal before posting to Xero. Represents a prior year that has already been posted; It is inactive and unable to be edited or voided since there are posted entries in future years. This represents a journal already posted and available for voiding should you want to go back and edit the entry. This represents a current year journal that is not ready for posting due to issues still requiring to be fixed (eg. debits against the loan account) This indicates that the years' journals are now ready to post
8	Total	This column identifies the total value of: voluntary repayments - this is the application of any credits applied throughout the year, that reduced the minimum repayment required dividends issued - this is the balance of the credits applied to meet the minimum repayment required + any top-up to the dividend entered. interest - identifies the interest accrued on the account for the year. balance - is the expected balance at the end of the applicable financial year.
9	Year of Loan	Here you can see the opening balance of the loan, its status (ie. connected to Xero, in balance or out of balance for the last completed financial year. To change the comparison year, change via the drop-down at point 2 You can then see the total voluntary repayments, dividends issued, interest and closing balance by financial year. Note that if a cell is orange, it has issues to be resolved before you can post the journal.
10	Full Screen, Minimise, Close	These are part of Shared Elements
11	Add to workflow, linked documents, tags, collaboration, audit history	These are part of Shared Elements

The Loan Details Tab

These tabs represent each of the loans currently at play for the currently selected company.

Variable Name		Description
1	Financial Years	Each year for the currently selected loan schedule is listed below, showing a high-level overview for each financial year. Year 0 is the establishing year - Where connected to Xero, you can expand this to see the transactions that create the establishing entry. Year 1 is your first year where repayments are required - The primary difference to any other year is the Lodgement Date option, which alters the minimum repayment calculations based on payments made prior to this date. Key elements include: The date represents: A private company's lodgment day is the earlier of the due date for lodgement or the actual date of lodgment of the private company's income tax return for the income year How is it populated?: We will populate the date based on the due date within the client detail page, but if that is blank, we will populate it with May 15 of the relevant year. Either way, YOU MUST REVIEW THIS DATE for it will materially impact the minimum repayment due this year. Please note, that this feature was added as of May 8, 2021, and so will only appear on schedules created after this date. Previously this was something you had to handle manually yourself. Year 2 onwards - Shows high-level values for each respective year; Each of these years can be expanded to show the calculation schedule and Xero ledger (if sync with Xero selected) The period represents the financial year detail Benchmark Interest Rate - Identified the ATO defined benchmark interest rate for that year. Where this has yet to be established, it won't show any details. Minimum Repayment - This is the minimum repayment required under legislation; Id does not identify what has actually been paid, just the mandatory minimum. Repayments - Identifies the actual repayments made for that year; By default it will show the minimum required, but will update as further repayments are added. Total Interest & Rounding - This shows the total interest accumulated on the loan at benchmark interest rates; We round this number down. Closing Balance - This takes the prior period closing balance and subtracts the payments then adds the interest to establish the closing balance for the year. Calculate Pay Out - Utilise this to quickly calculate a payout value as at a specific date. Useful for when you have a credit that needs to be applied across multiple loans as at a specific date, but you first need to know how much to journal to the loan, allowing for interest. As you work through the Xero Ledger details, you will see a status at the top that gives you a current status for each period; Xero Ledger Issues to be resolved - Until all the transactions in the Xero ledger have been re-allocated or allocated to the calculation schedule, you will receive this notification. Schedule ready to post - will appear once all the Xero ledger transactions have been dealt with.
2	The calculation Schedule	Calculation Schedule - This is where we carry out the detailed interest and minimum dividend calculations after bringing to account any repayments on the applicable loan. Where not synced with Xero - You use the add repayments option to add in repayments manually; Where synced with Xero - Allocate payments from the Xero Ledger area (see below) up into the calculation schedule.
3	The Xero Ledger	This area only appears where "sync with Xero" is selected in the setup. It represents a transaction listing from Xero for the applicable loan account over the financial year. The aim for this area is to align the Xero ledger with the calculation schedule above. Opening Balance - If red, the prior years in AccountKit either need to be tweaked to match Xero OR Xero needs to be updated to reflect the schedule. These need to match before the figures are finalised and any journals are posted since it'll change the interest and minimum repayment figures. Debits Column - The debits shouldn't exist in a prior year loan. Click on them to be taken into Xero to re-assign them to a current year loan. Upon returning, the accounts will be refreshed. Credits Column - the credits can either be re-assigned to another account by clicking through to Xero OR can be used a repayment in the current year by selecting the icon in the action column; where you are given two options. Use this option to assign the single credit up to the calculation schedule after which the interest and minimum repayments are re-calculated. Use this option to split a single payment to multiple payments across multiple dates within the calculation schedule. Useful for when you have a net figure journaled in, but you need to break this down to multiple repayments for calculating interest correctly. Upon completing all entries, including posting the final interest and dividend journals, the out-of-balance section will be zero.
4	Full Screen, Minimise, Close	These are part of Shared Elements
5	Add to workflow, linked documents, tags, collaboration, audit history	These are part of Shared Elements

Before you Start

So you can get through the process of setting up your Division 7a schedules in one efficient sitting, there are some pointers to be aware of and steps you should do first before commencing the process.

Useful Pointers

Before you start doing anything at all, it's useful to be aware of a few other elements that super important as follows:

The loans are assumed to be built and administered from within the company itself, not from the recipient of the loan. (eg. If there's a trust with a bucket company, these loans must be created and attached to the bucket company and not the trust)
Every new year's loan must be in their own account. ie. you can't have a single amalgamated loan balance.

Practice Settings

Review your practice settings to ensure the default settings for the division 7a are how you like to process the entries into Xero.

Show interest and dividend journals on cash basis reports
- Enables you to define whether any interest and dividend journals posted from within the tool are to show on cash basis reports or not.

i	Note that the division 7a tool settings can be overwritten on a per schedule basis under the Actions -> Settings menu option.

Prepare the entities you plan to reconcile

Confirm Setup in Accounting Software - Confirm and setup as required the applicable dividend, interest received and loan account within your accounting software.
Confirm Accounting Software Connected - If the client has an online accounting package like Xero, first ensure you’ve connected them to AccountKit by going to the applicable client page. Then click on the applicable Integration icon to trigger a process to connect and download the client data into AccountKit;
- Until this process has finished, you won't be able to initiate any connected tools for that client - you will be notified once complete.
- See here for more details about connecting and disconnecting from Xero
Prior Year Schedules - Ensure you have on hand any historical division 7a schedules as we will establish them first.
Date Last Reconciled - If it’s a pre-existing div7a schedule from prior years, identify the date the account was last reconciled; AccountKit will start calculating and posting entries from this date.

How to create a non-connected division 7a schedule

Where you're not looking to post your interest or dividend journals directly into Xero, follow these steps to build your schedule.

Help_-_Tools_-_Div7a_-_CreateNewSchedule-NotConnected.gif

Add New - From the list page, select the "Add new Division 7a Schedule" option.
Basic Details - Fill in the basic details, skipping the "Sync with Xero" option should it enable. The options are relatively self-explanatory, but specifically, ensure the following:
- Year of Loan - Set this to the year the loan commenced
- Type - Defines the duration of the loan based on whether it's secured / unsecured (applicable to loans prior to 30/06/2020)
- Description - Add further detail about the loan here for ease of identification; For example, you could identify the core purpose that caused the div7a schedule to arise.
- Balance - This is the establishing value of the loan for Division 7a purposes.
  - NOTE - If you're electing a conversion year, you could put the conversion balance here if you wish in the event that you don't want to put details into each prior years figures on the workpaper.
- Conversion Year - If you've previously reconciled the loan within your own workpapers up to a prior year, use this date to define where AccountKit will take up carrying out the calculations
- Default Dividend Date - Set the date that you would like the dividend for the selected loan to be posted on by default; This impacts the interest calculations due to the timing of the dividend entry; This can be overwritten on a per year/dividend basis.
- Link documents - Where a document management system has been attached, you can elect to link back to a source document such as a division 7a loan agreement.
- Press Continue to build the schedule.
Set Conversion Year (if relevant)
If you want AccountKit to pickup calculating from a specific year, set the conversion year in settings

You have a couple of options here:
- Option 1 (Accurate) - The preferred method is to go to each of the prior years and set the repayments and interest amounts manually until the closing balance of the conversion year matches your records; OR
- Option 2 (Fast) - Just put the entry required to reduce the loan to your closing balance in the conversion year OR put the closing balance in the establishing balance field in the setup; The only issue with these options is that all the prior year totals won't report correctly on the summary tab, but doesn't impact the calculations thereafter.

i	Please Note: We do not check your prior-year calculations, but assume you have calculated the appropriate amounts.

Manually add in repayments from throughout the year
- Expand the applicable year
- Add any repayments already made throughout the year to have the calculator re-calculate the interest and minimum repayments.
- Work your way through each of the company div7a schedules to get them all up to date.
- Head to the Summary Tab and review the final dividend / interest outcome for the year.
To finalise the financial year:
- If you're happy with the outcome, simply copy the total figures into a journal and post.
- If you would like to increase the dividend (eg. to round it up) or change the date of posting for the dividend, simply press the icon and increase the applicable years until you have the desired dividend and enter the updated journal amount into your ledger software.
- The icon enables you to automatically calculate and enter the payout figure for the loan taking into account any interest calculations pending the timing of the loan.
- Once done with your journals, output the Excel reports as your workpaper

How to create a connected division 7a schedule

Utilise this process should you wish to calculate and post your interest and dividend entries direct into Xero reconciling the ledger account as you go.

Basic setup - Follow the same basic steps as above, except check the "Sync with Xero" option to enable the accounts you will be posting to. Select the required accounts as follows.
- Balance Sheet Account - The balance sheet account belonging to the loan
- Interest Received Account - Represents the location of the interest received on the div7a loan in question.
- Dividend Account - Identifies the account you want AccountKit to post the journal entry to as part of the year figures.
- Press Continue to build the schedule.
Review the Xero general ledger
- Debits - There shouldn't be any debits assigned to a prior year Division 7a loan (except for accrual of interest in a moment). Simply select the transaction to open it in Xero; Edit the entry to allocate it elsewhere then close the window to have it re-calculate the interest / repayments for the year.
- Credits - These are allowed, but if you would like to allocate them elsewhere, select the transaction and re-allocate in Xero before returning; They will then be cleared from the schedules; The alternate option is to press the "assign as repayment" icon to copy it into the repayment schedule, after which the interest / repayment will then be recalculated.
- At this point, you should only be out of balance by the net interest / repayment amount.
Review all schedules
- Expand each of the loans for the applicable financial year
- Follow the same process addressing any debits or credits within the Xero ledger.
- Once done, head to the Summary Tab and review the final dividend / interest outcome for the year.
Finalise the entries
- If you're happy with the outcome, simply press the icon to review a preview of the journal before posting.
- If you would like to increase the dividend (eg. to round it up), simply press the icon and increase the applicable year's final dividend until you're happy.
  - Utilise the icon to automatically calculate and enter the payout figure for the loan taking into account any interest calculations pending the timing of the dividend date.

- Then preview and post the updated journal amount into your ledger software utilising the post icon.
Output Reports
- Once done with your journals, output a report as verification from the Actions menu

Other Functions & Options

Forecasting future values

It's sometimes helpful to be able to see an estimate of future dividends and interest and play around with the outcomes. You can do this by toggling on the "Show forecasted values" toggle.

What happens when I toggle it on?
- We will utilise the last released Benchmark rate and project that to future years for ALL schedules.
- We draw a line for each schedule and the summary tab to make it clear where the projections start.
- You can then edit dividends for each of those years
What happens when I toggle it off?
- Any customisations to the dividends will be lost
Limitations
- The Division 7a Summary and Movement reports do not display any of the forecasted values
- You can NOT post any of the forecasted values into Xero

How to remove a payment from the calculation schedule

Where not synced with Xero - Simple click the cross at the end of the repayment line in the calculation schedule.
Where synced with Xero - You need to delete the payment from the Xero Ledger area; Where a single payment is split, all splits will be removed from the calculation schedule.

How to void a journal

Simply select the black plane icon (which turns green upon hovering) to void the dividend and interest journals.

How to refresh your Xero transactions

In the event you need to refresh your Xero transactions, as there has been a change that needs to be accounted for. Simply select the refresh icon at the top of any of the years loans OR down next the Xero Ledger heading
for example....

What if my prior years interest has changed?

This is a tremendously rare occurrence that has surfaced for some schedules that were created during its alpha or beta state. The very nature of any tools during this time period is that they're subject to change, so it's a case of being aware that you may need to account for these changes in the future.

How do I fix it?

Unfortunately there's no super quick fix, but ultimately should only take a minute per schedule to get back to a workable state once again.

Collate an export of the reports as at the point you last prepared entries and reconciled your Inter-Entity loans;
Update the description of all the loans you need to replace with something like "OLD" so you can tell at a glance which schedules were the original.
Recreate each of the schedules using the same details as you had originally used to create the first set of loans in the first place BUT set the conversion year to the year you had last completed in AccountKit (eg. if you previously had a conversion year of 2017/18 and used AccountKit to calculate figures for 2018/19, then you would use 2018/19 as your conversion year).
Enter the pre-conversion year values like before including the first AccountKit year values and make sure the values after entering match your closing balance as of that year (if connected to Xero, your opening balances in the calculation schedule should now match.
Lastly, go ahead as normal and complete the next years Division 7a Calculations.

That's it - you should now be back up and running once again.

Legacy User Interface

The Division 7A List Page

Area		Description
1	Add new Division 7A Schedule	Select this to start the process of creating a brand new division 7a schedule.
2	Balance at, Filter, Actions & Client Group	This area has 4 components Balance at: Selecting this updates the balance of the schedules within the table below so you can see what the balances are meant to be at the end of the selected financial year; It defaults to the last completed financial year. Search & Filter: The magnifying glass enables you to search and filter by any of the below columns. Actions: Create New: As Per above this creates a new EF schedule. Deleted Selected: Permanently deletes with no hope of recovery (Only available to practice admins) Archive Selected: Gets the selected out of sight once completed, But always retrievable. Unarchive Selected: Restores any archived schedules; Need first to check the "Show archived" at the bottom of the page though. Client Group - here you can specifically select a client group that you would like to filter the below by; Useful if you're working on a particular group and just want to see what division 7a schedules they have in place currently.
3	The list...	This is a snapshot of all current Division 7a Schedules running within your practice and their current status. Checkbox - Enables you to select multiple schedules to delete, archive, unarchive or post bulk journals. Client Name - This is the client entity that the Div7a loan belongs to. Description - This is a free text field in the event you would like to enter a basic description as to how the loan came into existence or any other useful information. (optional) Summary - Use this icon to get to the summary page for the select company schedule. Year of Loan - Identifies the year the loan was established Initial Balance – This is the original establishing balance for the loan. Type & Term – Identifies the applicable type (secured v's unsecured) and applicable duration of the loan. Balance - Identifies the expected balance as at the end of the selected "Balance at" financial year. Status – This identifies whether the Xero ledger is in balance with the calculation worksheet for the selected "Balance at" financial year.
4	Actions Column	These are the actions available to you for each division 7a schedule line. 3 Dot Menu - appears on mouseover at the end of the row. Edit - Selecting this will open the finance schedule for editing. Go to summary - Takes you to the summary tab for the selected company. Archive - Selecting this will open the finance schedule for editing. Delete - Selecting this will open the finance schedule for editing.