On 26 June 2020, the Australian Taxation Office (ATO) announced a streamlined process for COVID-19 affected borrowers to make applications under section 109RD to extend the time to make minimum yearly repayments (normally required to be made by 30 June 2020) under Division 7A. Borrowers can request an up to 12 month extension to 30 June 2021 to make the minimum yearly repayments due on or before 30 June 2020.

Importantly:

the ATO announcement is a deferral of the obligation to make the minimum yearly repayment. If the ATO grants relief, then a larger minimum yearly repayment must be made by the end of the 2021 income year to prevent the application of Division 7A; and
if a taxpayer applies for the deferral, and the ATO does not grant the deferral, there will be consequences under Division 7A for the year ended 30 June 2020.

For more information please contact:

Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176
E nbrydges@sladen.com.au

Daniel Smedley
Principal | Accredited Specialist in Tax Law
M +61 411 319 327| T +61 3 9611 0105
E: dsmedley@sladen.com.au

Rob Warnock
Principal Lawyer
T +61 3 9611 0155 | M +61 419 892 115
E: rwarnock@sladen.com.au