Division 7A is the rule that decides what it costs you to get profit out of your own project company, and it catches developers more often than almost any other tax provision. The pattern is ordinary: a project settles, the cash lands in the special purpose vehicle (SPV), you draw some out to fund the deposit on the next site, and nobody documents it. That draw can be treated as an unfranked dividend in your hands, taxed at your full marginal rate with no credit for the tax the company already paid. This guide works through when Division 7A bites on a development, what it costs, how a complying loan actually works, and what the High Court’s June 2026 decision in the Bendel case changed.
Division 7A sits in the Income Tax Assessment Act 1936, which is Commonwealth law, so it applies identically in New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory. There is no state variation to work around. None of this is tax advice. The treatment turns on your facts, so use it to frame the questions you take to your accountant before you draw the money, not after.
What is a Division 7A loan, and why should a developer care?
A Division 7A loan is any amount a private company lends to a shareholder or an associate of a shareholder that has not been put on complying terms. If it stays that way at the end of the income year, Division 7A can treat it as a dividend you never declared, taxed in your hands at your marginal rate and unfranked.
The Australian Taxation Office (ATO) explains the mechanism in its guidance on loans by private companies. The purpose of the Division is to stop company profits reaching shareholders tax free by being dressed up as something other than a dividend. The word “loan” is defined broadly in section 109D(3) of the Income Tax Assessment Act 1936, and reaches advances of money, the provision of credit, and any other form of financial accommodation.
Three features of development make this a live issue rather than a technicality.
The first is that development profit is lumpy and arrives at settlement. A project runs for two or three years with cash going out, then several lots settle in a matter of weeks and the company is suddenly holding real money. The temptation to move some of it is immediate, and the paperwork tends to lag.
The second is that developers rarely hold one entity. A landholding trust, a project special purpose vehicle (SPV), a construction entity and a bucket company is a normal shape for a group doing more than one deal. Money moves between those entities constantly, and Division 7A follows it through interposed entities, not just on the direct hop from company to shareholder.
The third is that the site is trading stock. A development company’s balance sheet is mostly land and work in progress, not cash, which affects the distributable surplus cap discussed below and can produce a deemed dividend at a moment when the company has nothing spare to pay it with.
When does Division 7A actually bite on a development project?
It bites whenever value moves from a private company to a shareholder or their associate without a dividend being declared or a complying loan being documented. The Australian Taxation Office (ATO) sets out the categories in its guidance on payments and other benefits affected. Translated into development language, these are the situations that most commonly catch a developer.
You draw cash from the project company mid-deal. Settlement money hits the special purpose vehicle (SPV) and you take $200,000 to fund the deposit on the next site, in your own name or through a family trust. That is a loan to a shareholder or an associate. Without a complying loan agreement in place by the lodgment deadline, it may be treated as a deemed dividend.
The company pays your private expenses. School fees, a car, a personal credit card, the interest on your home loan. Each is a payment for the benefit of a shareholder and generally falls within section 109C.
The company forgives a debt you owe it. An old loan account written off at year end is a debt forgiveness under section 109F, and can be deemed a dividend on the amount forgiven.
Your project company funds a related entity’s site. The completed project special purpose vehicle (SPV) has cash, the next special purpose vehicle (SPV) needs a deposit, so money moves across. If the two entities have common shareholders, or if the recipient is an associate, this may be a loan caught by the Division. Where the money passes through a chain of entities before reaching a shareholder, the interposed entity rules discussed below can still reach it.
The company lets you use an asset it owns. A completed apartment retained by the company that you or a family member lives in, a company-owned vehicle, a company-owned holiday house. The Australian Taxation Office (ATO) guidance on private use of assets confirms these arrangements can be treated as payments.
What does not trigger Division 7A is worth stating too, because developers frequently worry about the wrong thing. Money you lend to your company is not caught, because the Division only runs one way. A properly declared and franked dividend is not caught. Wages and directors’ fees paid through the payroll system are not caught by Division 7A, though they carry their own Pay As You Go (PAYG) withholding and superannuation consequences. The Australian Taxation Office (ATO) addresses several of the common misconceptions in its Division 7A myths debunked guidance.
What does a Division 7A deemed dividend actually cost?
The cost is the franking credit you lose. A deemed dividend under Division 7A is unfranked, so you pay tax on the full amount at your marginal rate with no offset for the tax the company has already paid on that profit. The same dollar is taxed twice.
The arithmetic is worth seeing. Assume $400,000 reaches your hands from a base rate company that has already paid tax at 25%, and assume you are on the top marginal rate of 47% including the Medicare levy.
| How the $400,000 comes out | Franking credit | Tax you pay | Net cost |
|---|---|---|---|
| Fully franked dividend | $133,333 | $250,667 gross, less the credit | about $117,300 |
| Division 7A deemed dividend | Nil | $188,000 | $188,000 |
On these assumptions the deemed dividend may cost roughly $70,700 more than the same money paid out as a properly declared franked dividend. Both figures are illustrative and depend on your other income, the company’s tax rate and its franking account balance, but the direction does not change: Division 7A generally makes the same extraction more expensive, and the gap is close to the value of the franking credit.
The rates behind that table come from the Australian Taxation Office (ATO) company tax rates, which set 25% for a base rate entity (broadly a company with aggregated turnover under $50 million and no more than 80% base rate entity passive income) and 30% otherwise, and the Australian Taxation Office (ATO) resident tax rates for individuals.
There are two aggravating features that make this worse than a simple rate difference. A deemed dividend is assessable in the year the loan was made or remained outstanding, which may be several years back, so an amendment can bring interest and possibly penalties with it. And the deemed dividend can arise in a year where the cash has already gone into the next site, meaning you are taxed on money you no longer hold. That is the same cashflow trap covered in the guide to income tax on property development profit, and it is one of the more common ways a developer’s tax bill and their bank balance come apart.
What is the Division 7A benchmark interest rate for 2026-27?
The benchmark interest rate for the 2026-27 income year is 8.77%, up from 8.37% in 2025-26.
The Australian Taxation Office (ATO) benchmark interest rate page is the primary source and is the one to check each year rather than carrying forward last year’s number. The rate is not set by the Australian Taxation Office (ATO) at discretion: it is the Reserve Bank of Australia’s “Housing loans; Banks; Variable; Standard; Owner-occupier” indicator lending rate last published before the start of the income year. For 2026-27 that was the rate published on 5 June 2026. A later revision by the Reserve Bank of Australia does not change the rate once the income year has started.
| Income year ended 30 June | Benchmark rate |
|---|---|
| 2027 | 8.77% |
| 2026 | 8.37% |
| 2025 | 8.77% |
| 2024 | 8.27% |
| 2023 | 4.77% |
Two practical points follow for a developer. The rate resets annually and applies to each year of the loan, so a seven-year complying loan taken in 2026-27 does not lock in 8.77% for its life; each year’s minimum yearly repayment (MYR) is worked out on that year’s rate. And 8.77% is not a token number. It generally sits above what a good senior construction facility costs, which means a complying loan is real money leaving your pocket, not a paper exercise. Developers who plan to sit on a Division 7A loan for seven years while the rate floats are financing their own drawings at an above-market rate.
If your company has a substituted accounting period rather than a 30 June year end, the applicable rate is the one last published before the start of that period, and the Australian Taxation Office (ATO) page above works through two examples.
What makes a loan a complying Division 7A loan?
A loan avoids being treated as a deemed dividend if it meets the conditions in section 109N of the Income Tax Assessment Act 1936: a written agreement, an interest rate at least equal to the benchmark rate for each year, and a term within the statutory maximum.
The timing condition is the one developers miss. The written agreement generally has to be in place by the earlier of the due date and the actual date of lodgment of the company’s tax return for the year the loan was made. Miss that date and the loan cannot be retrospectively fixed by signing an agreement later, though the discretion discussed below may occasionally help. In practice, a draw taken in June has a documentation deadline the following year, which feels generous until a project consumes the intervening twelve months.
The seven-year unsecured loan
Seven years is the maximum term for an unsecured complying loan. There is no security requirement, no valuation and no registration, which makes it the default for most developer drawings. The trade-off is the repayment pace.
On a $400,000 unsecured loan at the 2026-27 benchmark rate of 8.77%, the first minimum yearly repayment (MYR) works out at roughly $78,900. Over the full seven years you might repay somewhere near $552,000 in total, of which around $152,000 is interest, assuming the rate held steady (it will not). That is real cash out of your household every year, at a rate above what your senior lender charges, funded from income you have already paid tax on.
The 25-year secured loan
Twenty-five years is available where the whole of the loan is secured by a registered mortgage over real property, and the market value of that property, less any liabilities secured over it in priority, is at least 110% of the loan amount when the loan is made.
The longer term cuts the repayment sharply. The same $400,000 at 8.77% over 25 years produces a minimum yearly repayment (MYR) of roughly $40,000 rather than $78,900, which is about half. The catch is the total: you might pay close to $999,000 over the full term, so you buy cashflow relief at a meaningful long-run cost, and you tie up a registered first or second mortgage over real property for 25 years.
This is the one place where the state you are in touches Division 7A, though not the tax rule itself. A registered mortgage has to be registered through the relevant state or territory land registry, so the mechanics and the fees differ: NSW Land Registry Services in New South Wales, Land Use Victoria in Victoria, Titles Queensland in Queensland, Landgate in Western Australia, Land Services SA in South Australia, and the equivalent registries in Tasmania, the Australian Capital Territory and the Northern Territory. The 110% test and the Division 7A consequences are identical everywhere; only the registration process varies.
A useful point for developers with a shifting asset base: the Australian Taxation Office (ATO) has accepted that releasing some of the secured properties or substituting a mortgage over different properties need not trigger a deemed dividend, provided the 110% test is still met at the date of the change and the payment terms are not altered. That matters when the security is development land you intend to sell.
What is the minimum yearly repayment?
The minimum yearly repayment (MYR) is the amount you must pay the company each year to keep the loan complying. It is a credit-foncier style calculation set by section 109E, based on the balance not repaid at the end of the previous year, that year’s benchmark rate, and the remaining term.
The first minimum yearly repayment (MYR) is due in the income year after the loan is made, and it must be paid by 30 June. Fall short in any year and the shortfall may itself be treated as a dividend, capped at the distributable surplus. The Australian Taxation Office (ATO) publishes a Division 7A calculator and decision tool that works the number out.
One trap deserves a flag. Repaying the loan just before 30 June and re-borrowing the same money in July does not generally work. Section 109R allows the Australian Taxation Office (ATO) to disregard a repayment where a reasonable person would conclude the borrower intended to obtain a similar or larger loan again. Circular repayments funded by the company itself are a well-worn pattern and the Australian Taxation Office (ATO) is alert to them.
Did the Bendel decision fix the bucket company problem?
Partly, and it is the biggest change to Division 7A in almost two decades. On 10 June 2026 the High Court decided Commissioner of Taxation v Bendel [2026] HCA 18, dismissing the Commissioner’s appeal by a 5-2 majority and confirming that an unpaid present entitlement (UPE) owed by a trust to a corporate beneficiary is not, by itself, a loan for Division 7A purposes.
This matters to developers because the trust distributing to a bucket company is one of the most common structures in the industry. A landholding or development trust makes a profit, distributes it to a private company beneficiary to cap the tax at the company rate rather than a beneficiary’s marginal rate, and the cash stays in the trust to fund the next project. The amount the trust owes the company is the unpaid present entitlement (UPE).
For roughly fifteen years the Australian Taxation Office (ATO) treated that unpaid present entitlement (UPE) as a Division 7A loan, first through Taxation Ruling TR 2010/3 and later through Taxation Determination TD 2022/11. The practical effect was that developers had to either pay the cash across to the company, or put the unpaid present entitlement (UPE) on a complying seven-year loan and start making minimum yearly repayments (MYR) back to a company that had no use for the money. Working capital left the trust that was actually building the projects.
What the High Court decided
The court held that mere inaction by a corporate beneficiary in respect of its entitlement does not create a loan within the extended definition in section 109D(3). The Australian Taxation Office (ATO) published a decision impact statement on the Bendel case on 26 June 2026, accepting that the High Court’s reasoning contradicts the position in its public ruling and that the ruling will be withdrawn. Other Australian Taxation Office (ATO) guidance is being reviewed and may be amended or withdrawn. The consultation period on the decision impact statement runs until 24 July 2026, so further guidance may follow.
Two limits are important, and this is where most of the commentary written before June 2026 will mislead you.
An unpaid present entitlement (UPE) that was actually converted into a loan is still a loan. If your accountant put the entitlement onto a section 109N complying agreement in a prior year, the Australian Taxation Office (ATO) position is that it is a loan as a matter of fact and continues to be treated as one. Bendel does not unwind it retrospectively.
And doing nothing with the entitlement is different from dealing with the funds. The moment the trust uses that money to benefit a shareholder of the corporate beneficiary, other provisions engage.
What Subdivision EA still catches
Subdivision EA can produce a deemed dividend where a trust that owes an unpaid present entitlement (UPE) to a private company then makes a payment or loan to, or forgives a debt of, a shareholder of that company or their associate. The Australian Taxation Office (ATO) said so explicitly in the Bendel decision impact statement.
For a developer this is the whole point. Leaving the unpaid present entitlement (UPE) sitting in the trust and using the cash to buy the next site in the trust is one thing. Leaving it there and lending it to yourself is another, and Subdivision EA is designed for exactly that. Bendel removed the automatic deemed loan; it did not open a channel to your personal bank account.
What section 100A still catches
Section 100A taxes the trustee at the top marginal rate where a beneficiary’s entitlement arose from a reimbursement agreement, broadly where one entity is made presently entitled but someone else gets the benefit, and the arrangement is not an ordinary family or commercial dealing. There is no time limit on the Commissioner’s ability to raise an assessment under it.
The Australian Taxation Office (ATO) compliance approach is set out in Practical Compliance Guideline PCG 2022/2, which sorts arrangements into green, blue and red risk zones, and its interpretative view sits in Taxation Ruling TR 2022/4. The Australian Taxation Office (ATO) flagged section 100A in the Bendel decision impact statement as a provision that may still apply where the entitlement arose from a reimbursement agreement. If Bendel has made you more relaxed about leaving entitlements unpaid, section 100A is the provision that should keep the arrangement honest.
Does the 2026-27 Budget minimum trust tax change the answer?
It may change the whole calculus, and it is worth planning around now even though it is not yet law. On 12 May 2026, as part of the 2026-27 Federal Budget, the Government announced a 30% minimum tax on discretionary trusts from 1 July 2028.
The announced design, per the Australian Taxation Office (ATO) summary and the Budget 2026-27 tax explainer, applies the minimum tax at the trustee level, with non-corporate beneficiaries able to claim a non-refundable credit for the tax the trustee paid. A time-limited three-year restructure rollover is proposed to be available from 1 July 2027 to move assets out of discretionary trusts into entities that are not discretionary trusts. Treasury has released a consultation paper with submissions closing on 31 July 2026, and the detailed design of the rollover, the collection mechanism and the treatment of excess franking credits are all still open.
Read alongside Bendel, this produces an odd two-step for developers. Bendel has just made the trust-to-bucket-company structure considerably easier to run, and the announced measure may take a good part of the benefit back from 1 July 2028 by imposing a 30% floor at the trustee level, which is above the 25% base rate company rate. A developer choosing a structure for a project that settles in 2029 is choosing under both rules at once.
The honest position is that this is announced policy, not settled law, and it may change materially through consultation or not proceed at all. It is a reason to keep a structure decision reviewable rather than a reason to restructure today. The broader structure question, company against trust against a hybrid of the two, is covered in the guide to property development tax structures.
Can Division 7A apply when the money never touches your hands?
Yes, and this is the rule that most often catches developer groups, because money in a multi-entity group rarely moves in a straight line. Section 109T allows Division 7A to operate as though the private company made the payment or loan directly to you, where it instead made it to an interposed entity and a reasonable person would conclude the arrangement was solely or mainly about getting funds to you or your associate.
The Australian Taxation Office (ATO) explains the operation in its guidance on interposed entities. There can be one interposed entity or a chain of them, and they can be individuals, companies, partnerships or trusts. Where the section applies, the Commissioner determines the amount of the notional payment or loan under sections 109V and 109W.
A typical developer shape shows how easily this arises. The first project special purpose vehicle (SPV) completes and holds $2 million of settlement proceeds. It lends $2 million to the family trust. The family trust lends $600,000 to you for a personal purpose and puts $1.4 million into the deposit on the next site. The $1.4 million may be a genuine commercial deployment. The $600,000 is the part a reasonable person would look at, and section 109T may treat the company as having loaned it to you directly, even though the company’s only transaction was with the trust.
Two things are worth knowing. Being an ordinary commercial transaction does not automatically put the payment outside section 109T; the Australian Taxation Office (ATO) view in Taxation Determination TD 2018/13 is that the section can still apply. And section 109R can operate to disregard repayments made to the company where the repaying entity is taken to have obtained a loan under the interposed entity rules, so unwinding these arrangements is not always as simple as paying the money back.
What if the company lets you use a completed unit?
That can be a payment, not a favour. Where a company provides an asset for use by a shareholder or their associate, section 109CA can treat the provision as a payment for Division 7A purposes, and the Australian Taxation Office (ATO) sets out the treatment in its guidance on payments by private companies and the use of assets.
This is a real scenario in development. A project does not fully sell, the company retains the last two apartments, and a family member moves into one. Or the developer keeps the penthouse. The amount of the deemed payment is generally the arm’s length value of the use, less any consideration actually given, so charging a market rent and actually paying it is the ordinary answer. The Australian Taxation Office (ATO) treats the provision of the asset in each subsequent income year as a separate payment, so this is not a one-year problem that goes away.
Retaining stock also shifts the project’s tax character in ways worth thinking through before you decide, since a retained apartment that is rented rather than sold raises trading stock and Capital Gains Tax (CGT) questions of its own, and rental income counts as base rate entity passive income when testing whether the company still qualifies for the 25% rate.
Is there a cap on the deemed dividend?
Yes. The total amount treated as a dividend under Division 7A in an income year is capped at the company’s distributable surplus, calculated under section 109Y. The Australian Taxation Office (ATO) sets out the formula in its guidance on distributable surplus: net assets, plus Division 7A amounts, less non-commercial loans, paid-up share value and repayments of non-commercial loans.
Developers occasionally read this as a defence, on the basis that a mid-project company has drawn down debt and has little equity. Treat that with caution for three reasons.
The calculation takes assets at their book value from the company’s accounting records but subtracts only present legal obligations and certain specified provisions. It is not simply the net assets line on your balance sheet.
Where the Commissioner considers the accounting records significantly undervalue or overvalue the company’s assets or provisions, a substituted value may be used. Development land carried at historic cost while the market has moved is exactly the fact pattern that invites this.
And the timing rarely helps. A deemed dividend usually crystallises at 30 June of the year the loan is outstanding, and by the time the project has settled and the profit is real, the distributable surplus is real too. The cap tends to protect a company that is genuinely worthless, which is not the position of a company that just settled a project.
What happens if you get it wrong?
You may still have a path, but it is discretionary and it is not a formality. Section 109RB allows the Commissioner to disregard a deemed dividend, or allow it to be franked, where the breach resulted from an honest mistake or inadvertent omission.
The Australian Taxation Office (ATO) explains its approach in its guidance on the Commissioner’s discretion under section 109RB, and in Practice Statement Law Administration PS LA 2011/29. The mistake must be genuine and supportable by objective evidence. Ignorance of the rules, or a failure to take reasonable care, would generally not qualify. The Commissioner also weighs the circumstances that led to the omission and how quickly corrective action was taken, and may attach conditions.
The practical reading for a developer is that section 109RB is a remedy for the transposed figure or the agreement that was signed but misdated, not for the three years of undocumented drawings you never mentioned to your accountant. Assume it will not save you and document the loan instead.
Two habits tend to keep developers out of this territory. Decide how profit will come out of the entity before the first lot settles, not in the week the money lands, so the choice between a franked dividend, a wage and a complying loan is made while all three are still available. And run a loan account reconciliation at each settlement run rather than once a year at tax time, because the documentation deadline is fixed to the company’s lodgment date and a project can quietly burn the whole window.
How does Division 7A land in your feasibility?
It generally does not land in the project feasibility at all, and that is the point most developers get wrong. Division 7A taxes the extraction of profit from an entity, not the project. Your feasibility measures whether the deal works. Division 7A decides what the profit costs to get into your hands afterwards, and it sits in your group’s tax position rather than the project’s cost lines.
That distinction matters when you are deciding what a deal has to return. If your realistic path out of the company is a franked dividend, the effective cost on the cash you receive might be somewhere near 29% on a top-rate assumption, on the figures above. If the money leaves as an undocumented drawing, the same cash could cost 47% with no credit. A deal modelled to a development margin that only works on the first assumption is a deal that has quietly bet on your paperwork.
Feasly models the project: total development cost (TDC), the funding stack, the development margin on cost and on revenue, and the month-by-month cashflow through settlement. It does not model your group’s tax position, and Division 7A is a group question rather than a project one. What the model is useful for is the input to that question: the timing and size of the profit landing in the entity, which is what you and your accountant need in front of you to decide how it comes out. The cashflow view is the practical companion here, and development cashflow modelling covers how the settlement run drives it.
Where Division 7A does touch a project directly is the minimum yearly repayment (MYR) obligation on an existing loan. If you are already carrying a $400,000 complying loan, that is roughly $78,900 a year of after-tax cash you must find, at 8.77% on 2026-27 rates, every year for seven years, regardless of whether your current project has settled anything. Developers who model equity contributions on the next deal without allowing for existing Division 7A repayments can find the equity is already committed. Worth flexing in your model rather than assuming.
Does Division 7A apply in New Zealand?
No. Division 7A is Australian law and has no New Zealand equivalent, but New Zealand has its own rules for the same behaviour, and they are stricter in some respects and looser in others.
The relevant concept in New Zealand is the overdrawn shareholder current account. Inland Revenue explains it in its guidance on the shareholder current account. Where a shareholder draws more from a close company than they have put in, the account goes overdrawn, and the company is generally expected to charge interest at the prescribed rate. Where it does not, the benefit is typically treated as a dividend, or, for shareholder-employees, may fall within Fringe Benefit Tax (FBT), with the company carrying the liability.
Inland Revenue set out its position in Interpretation Statement IS 24/09 on overdrawn shareholder loan account balances of New Zealand resident close companies. The prescribed rate used for the Fringe Benefit Tax (FBT) calculation on low-interest loans is reset periodically and was 5.77% per annum from 1 January 2026, so check the current rate before relying on it.
The practical difference for a developer working across both markets is the pressure point. Australia’s Division 7A forces the loan onto a seven or 25-year amortising agreement with an above-market rate and a hard lodgment deadline. New Zealand is generally more about charging the prescribed interest and accounting for the benefit, without the same amortisation mechanics. Neither lets you take money out of a company for free.
Frequently asked questions
Can I just repay the loan before 30 June and borrow it again in July? Generally not. Section 109R allows the Australian Taxation Office (ATO) to disregard a repayment where a reasonable person would conclude the borrower intended to obtain a similar or larger loan again. Circular repayments funded by the company itself are a well-known pattern.
Does Division 7A apply if my company lends to another company I own? It can. Division 7A applies to loans to shareholders and their associates, and a company you control is generally an associate. There is an exception where the borrowing company is not acting as a trustee, which is one reason developer groups often route project funding through companies rather than individuals, but the interposed entity rules in section 109T can still reach through the chain where the real destination is you.
Is a company guarantee for my personal loan caught? A guarantee by itself is generally not a loan. The exposure typically arises if the company is called on the guarantee and actually pays, which may be a payment for your benefit.
Do I have to pay the minimum yearly repayment in cash? It has to be a real repayment. It can be set off against a franked dividend the company declares to you in the same year, which is a common and legitimate approach: the company declares a dividend, you apply it against the loan, and the franking credit reduces the tax on the dividend. Talk to your accountant about the mechanics, because the dividend still has to be properly declared and the company needs franking credits.
Does Bendel mean I can leave unpaid present entitlements (UPE) in the trust forever? It means the entitlement is not automatically a Division 7A loan. It does not mean the funds are unrestricted. Subdivision EA may apply if the trust deals with those funds in favour of a shareholder of the corporate beneficiary, and section 100A has no time limit where a reimbursement agreement is involved. The Australian Taxation Office (ATO) is also reviewing its guidance, so the position may develop.
My accountant already converted our unpaid present entitlements (UPE) to complying loans. Can we unwind that after Bendel? The Australian Taxation Office (ATO) position in the Bendel decision impact statement is that entitlements actually converted to loans are loans as a matter of fact and continue to be treated as such. This is a question for your accountant on your specific documents rather than something to assume.
The bottom line for developers
Division 7A is not really a tax rule about loans. It is a rule about timing and paperwork, and developers lose to it on both.
The timing point is that the decision about how profit leaves the entity is best made before the first lot settles, when a franked dividend, a wage and a complying loan are all still on the table. Once the cash has moved and the year has closed, your options narrow to a complying loan at 8.77% or a deemed dividend at your full marginal rate.
The paperwork point is that a written agreement signed before the company’s lodgment date costs almost nothing and may save you something close to the value of the franking credit. On a $400,000 draw at the top marginal rate, that gap could be roughly $70,000.
The Bendel decision has genuinely improved the position for developers running a trust and a bucket company, and it removed a fifteen-year requirement to strip working capital out of the trust that was actually building the projects. But it removed one deeming rule, not the Division. Subdivision EA, section 100A and the interposed entity rules in section 109T all still sit behind it, and the announced 30% minimum trust tax from 1 July 2028 may reshape the structure question again before most current projects settle.
Model the project properly, then treat the profit extraction as its own decision with its own cost, and take it to your accountant while you still have choices.
This guide is general information for property developers, not legal, tax, or financial advice. Rates, thresholds and rules change and depend on your circumstances and structure. Confirm the current position with the Australian Taxation Office (ATO), and Inland Revenue in New Zealand where relevant, and your own tax and legal advisers before you rely on any figure here.