## Minimum Yearly Repayment — First Year

**Inputs**
- Loan balance: P = $50,000
- Benchmark rate: r = 8.77% = 0.0877
- Remaining term: n = 7 years

**Formula**

$$MYR = \frac{P \cdot r}{1 - (1 + r)^{-n}}$$

**Working**

1. $(1 + r)^{n} = (1.0877)^{7} \approx 1.801209$
2. $(1 + r)^{-n} = 1 / 1.801209 \approx 0.555182$
3. $1 - (1 + r)^{-n} = 1 - 0.555182 = 0.444818$
4. Numerator: $P \cdot r = 50{,}000 \times 0.0877 = 4{,}385.00$
5. $MYR = 4{,}385.00 / 0.444818 \approx 9{,}857.96$

**Minimum yearly repayment (first year): $9,857.96**

## Controlling Authority

**Section 109E of the *Income Tax Assessment Act 1936* (Cth)** — within Division 7A. Section 109E sets the requirement to make the minimum yearly repayment to avoid a deemed dividend, and the amortising formula is prescribed in **s 109E(5)–(6)**. The benchmark interest rate referred to in the formula is defined in **s 109N(2)**.