In the case of repayment before the date of incorporation of the private company for the year in which the merged loan is granted, the amount of capital on 1 July of the first year of income following the granting of the loan is not the sum of the loans constituting on 1 July. Rather, it is the sum of the constituting appropriations just before the date of the lodgment. For this purpose, payments made before the payment date shall be considered as the year in which the merged loan is made. If the interest rate actually used in the written agreement exceeds the reference rate, the amount of the loan remaining at the end of the previous year is a nominal amount. There is no prescribed form for written agreement. However, the agreement should at least identify the parties, the essential conditions of the loan (i.e.: Where a shareholder or his partner repays a merged loan from a private company below the minimum annual repayment required and they satisfy the Commissioner that the minimum annual repayment has not been achieved due to circumstances beyond their control (and that they would suffer unreasonable harshness if the loan were treated as a dividend), the private company is not used to pay a dividend. The law aims to prevent private companies from making tax-exempt profit distributions to shareholders (or their associated enterprises) in the form of loans. Note that even if the interest rate in the written agreement differs from the reference rate, the reference rate is used for the calculation of the minimum annual repayment for the purposes of Division 7A.