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The Tax Office has extended relief for taxpayers who are unable to meet the minimum yearly repayments on Division 7A loans due to COVID-19.
On Monday, the ATO confirmed it would offer an extension of the repayment period for those who are unable to make their minimum yearly repayments (MYRs) by the end of the lender’s 2020–21 income year due to the ongoing effects of COVID-19 under section 109RD.
A similar extension was provided last year for the 2019–20 MYR. Taxpayers who obtained the extension last year will be required to make up the shortfall of their 2019–20 MYR by 30 June 2021.
Borrowers seeking the relief this year will be required to complete a streamlined online application form where they will be asked to confirm the shortfall, that the COVID-19 situation has affected them and that they are unable to pay the MYR as a result.
The ATO can only make a decision in writing after the end of the lender’s 2020–21 income year, within 28 days on receipt of the lodgement form.
Once approved, borrowers will be informed that they will not be considered to have received an unfranked dividend if the shortfall is paid by 30 June 2022.
The streamlined application process only applies to applications for an extension of the 2019–20 and 2020–21 MYR of up to 12 months under section 109RD for COVID-19-affected borrowers, with the ATO noting that it is not intended to be available in the 2021–22 income year and beyond.
Borrowers can still apply to obtain a longer extension of time outside the streamlined process under section 109RD, or for relief on the grounds of undue hardship under section 109Q.
Further details and the approved ATO form can be accessed here.
Jotham Lian
22 June 2021
accountantsdaily.com.au
