Division 7A review checklist for Australian tax practitioners
Division 7A is an area where a single balance in a set of financial statements can require information from several parts of the tax file. A reviewer may need to understand who the transaction involved, when it occurred, what documentation exists, how it has been recorded, whether a particular treatment is being relied upon, what repayments or other transactions occurred and how the practitioner reached their conclusion.
This checklist is designed as a review framework for a completed file. It is not a Division 7A calculator and does not determine whether Division 7A applies to a particular taxpayer or transaction. The registered tax practitioner remains responsible for applying the law, performing or verifying calculations and reaching the professional conclusion.
Published 11 August 2026. Last reviewed 16 August 2026. Written by Huy Tu, CA. Technically reviewed by Alex Hammond, CPA.
1. Identify balances and transactions that may require consideration
Start with the underlying facts rather than relying only on the account description. Depending on the client, consider whether the file contains:
- shareholder loans
- director loans
- loans involving associates
- related-party receivables
- related-party liabilities
- payments to shareholders or associates
- private expenses paid by the company
- debt forgiveness
- use of company assets
- transactions involving related trusts
- transactions involving other related entities
- private-company beneficiary entitlements where relevant
A transaction described simply as "loan", "advance", "director account" or "related party" may require further analysis. The reviewer should establish what the balance actually represents.
2. Identify the parties
Confirm the relevant parties and relationships. Depending on the circumstances, this may include:
- the private company
- the recipient or borrower
- shareholders
- directors
- associates
- trusts
- beneficiaries
- other related entities
Consider whether another entity sits between the company and the ultimate recipient. Do not assume that the accounting name of the account answers the tax question. The relevant legal and factual relationships may need separate consideration.
3. Establish the transaction history
The closing balance alone may not provide enough information. Depending on the circumstances, review:
- opening balance
- amounts advanced during the year
- repayments
- interest
- journal entries
- dividends applied against the balance
- movement between related accounts
- refinancing
- additional advances
- closing balance
Consider whether the workpapers clearly explain significant movements.
4. Check consistency across the file
Compare relevant information between available documents, which may include:
- financial statements
- general ledger or loan account
- tax workpapers
- company tax return disclosures
- loan schedules
- dividend documentation
- client correspondence
- agreements
- prior-year information
The same balance may appear differently between documents because of timing, rounding or classification. The reviewer should identify material differences and determine whether they are appropriately explained.
5. Determine the treatment the workpaper is relying upon
The completed file should make it reasonably clear how the practitioner proposes to deal with the relevant transaction. Depending on the circumstances, the workpapers may document that:
- Division 7A is not considered applicable
- an exclusion or exception is being relied upon
- an amount was repaid
- a complying loan arrangement is being relied upon
- an existing loan continues
- a deemed dividend has been recognised
- additional technical consideration is required
The reviewer should not have to infer the intended treatment from unrelated notes scattered throughout the file.
6. Review supporting loan documentation where relevant
Where a complying loan arrangement is being relied upon, review whether the supporting documentation relevant to the practitioner's conclusion is present. Depending on the circumstances, this may include information concerning:
- written loan agreement
- date of agreement
- parties to the agreement
- principal amount
- interest terms
- loan term
- relevant security
- timing requirements
- relevant workpapers
The practitioner should verify the arrangement against current legislation, applicable ATO guidance and the facts of the particular matter.
7. Review the practitioner's minimum yearly repayment workpaper where relevant
Where a minimum yearly repayment is relevant, confirm that the submitted file contains the practitioner's calculation and supporting information. Review considerations may include whether the workpaper clearly identifies relevant information such as:
- opening loan balance
- relevant income year
- benchmark interest rate used by the practitioner
- remaining loan term
- repayments recorded during the year
- interest treatment
- relevant repayment dates
- closing balance
- supporting evidence
The reviewer remains responsible for verifying the calculation using the firm's approved process and authoritative sources.
Important Taxpartna distinction
Taxpartna does not calculate Division 7A minimum yearly repayments.
Taxpartna's Division 7A review checks submitted workpapers for the presence of required items and supporting information and may compare relevant information contained across the submitted documents. Taxpartna may surface potential inconsistencies, missing information or matters requiring practitioner attention. The registered tax practitioner remains responsible for the calculation, technical interpretation, professional assessment and final conclusion.
8. Review the nature of repayments
Where repayments are relevant to the practitioner's treatment, do not necessarily assess them solely by confirming that money appears to have returned to the company. Depending on the circumstances, further review may be required where there are:
- related advances
- further borrowings
- journal entries
- transactions occurring close together
- movements through associated entities
- unusual repayment patterns
The practitioner should consider whether the underlying transactions require further technical analysis.
9. Review relevant timing
Timing can be important in Division 7A matters. Depending on the treatment being relied upon, review whether the file clearly identifies relevant dates such as:
- the relevant income year
- date of the original transaction
- relevant repayment dates
- date of any agreement
- other relevant lodgment or documentation dates
Do not assume that a document prepared during review necessarily satisfies any applicable timing requirement. The practitioner should verify relevant requirements against current legislation and ATO guidance.
10. Review distributable-surplus workpapers where relevant
Some Division 7A conclusions may require consideration of the company's distributable surplus. Where this is relevant to the practitioner's treatment, consider whether:
- an appropriate workpaper is present
- the amounts used can be traced to supporting records
- the workpaper is internally consistent
- the practitioner's conclusion is documented
Taxpartna can assist in checking submitted workpapers and supporting information. The practitioner remains responsible for performing or verifying the calculation and determining its legal effect.
11. Consider trust-related arrangements separately
Where a private company has relationships or transactions involving a trust, additional issues may require consideration. Depending on the circumstances, the reviewer may need to consider matters including:
- present entitlements
- financial accommodation
- trust ledger treatment
- subsequent payments or loans
- loan documentation
- timing
- related-party relationships
- applicable ATO guidance
These arrangements can be technically complex. The existence of a trust-related balance should therefore prompt review rather than an automatic conclusion.
12. Review tax return disclosures
Compare relevant tax return disclosures with supporting information in the file. Depending on the circumstances, this may include comparison with:
- financial statements
- ledger balances
- loan schedules
- Division 7A workpapers
- supporting documents
- related-party disclosures
Material unexplained differences should be investigated before the practitioner completes sign-off.
13. Consider whether expected supporting information is missing
A Division 7A review should consider not only what is present but whether relevant information expected for the treatment cannot be located. Depending on the matter, this may include:
- loan agreement
- minimum yearly repayment workpaper
- evidence supporting repayments
- dividend documentation
- related-party account detail
- distributable-surplus workpaper
- client explanation
- supporting calculation
- prior-year loan schedule
The fact that something cannot be located does not itself determine the tax outcome. It identifies a matter that may require further practitioner enquiry.
14. Record the practitioner's conclusion
The completed file should make the professional conclusion understandable. Depending on the issue, documentation may record:
- transaction identified
- parties involved
- relevant issue considered
- supporting documentation reviewed
- calculations performed or verified
- additional information obtained
- treatment adopted
- reason for that treatment
- adjustments made
- future-year action required
The final conclusion belongs to the practitioner. It is not determined by the checklist or by Taxpartna.
How Taxpartna assists with Division 7A review
Taxpartna can assist the practitioner by reviewing information contained in the submitted tax file. Depending on the file, its review may assist by:
- identifying related-party loan information
- locating relevant balances across submitted documents
- comparing financial-statement, workpaper and return information
- checking submitted Division 7A workpapers for the presence of required items and supporting information
- identifying whether expected supporting documentation appears to be present
- bringing relevant information and source documents together
- surfacing inconsistencies or missing information for practitioner assessment
Taxpartna does not independently determine the taxpayer's Division 7A treatment. Taxpartna does not calculate the Division 7A minimum yearly repayment. Taxpartna does not replace the practitioner's technical analysis. It assists the practitioner by making relevant information in the submitted file easier to identify and review.
Explore tax QA software for Australian accounting firms, Taxpartna's tax QA checks on the Features page, and the broader tax return review checklist.
Authoritative sources
Division 7A outcomes depend on the current law and ATO guidance. The following primary sources should be checked when this page is technically reviewed or materially updated.
- ATO - private company benefits (Division 7A dividends)
- ATO - Division 7A calculator and decision tool
- Income Tax Assessment Act 1936 (Cth)
Frequently asked questions
It is a structured list of the matters a tax practitioner works through when reviewing the Division 7A aspects of a completed private company file before sign-off. It focuses on identifying relevant loans and payments, confirming the supporting documents are present, and recording where further work or a professional conclusion is needed.
Important information. This checklist provides general information for registered tax practitioners reviewing Division 7A matters. It is not tax or legal advice and does not provide a conclusion about whether Division 7A applies to a particular transaction. Division 7A outcomes depend on the relevant facts, legislation and applicable guidance. Taxpartna is a quality assurance assistance tool designed for use by registered tax practitioners. Taxpartna does not provide tax advice, tax agent services or BAS agent services, and does not calculate Division 7A minimum yearly repayments. The registered tax practitioner remains responsible for calculations, professional assessment, conclusions and final sign-off.