Extension of time to make repayments on Division 7A loans
To offer more support due to the ongoing effects of COVID-19, an extension of the repayment period is now available.
It is available to those who were unable to make their MYRs by the end of the lender’s 2020/21 income year (generally 30 June).
The borrower can apply for this administrative relief using the ATO’s streamlined online application. Note that they must still make up the shortfall of their 2020/21 MYR by 30 June 2022.
Under a complying Division 7A loan from a private company, the borrower must make minimum yearly repayments (‘MYR’) before the end of the lender’s income year to avoid the loan being treated as an assessable dividend.
A similar extension was also available for the MYR for the 2019/20 year, and borrowers who obtained this extension needed to have made up that shortfall by 30 June 2021.
If they didn’t meet this deadline, they will need to either obtain a further extension of time for the 2019/20 MYR outside the streamlined process, or amend their 2019/20 tax return to include a dividend.
Many of our clients like to review their tax position to evaluate any strategies that may be available to legitimately reduce their tax. If you’re one, contact the team at Omnis Group in Subiaco Perth on 08 9380 3555 to book your review now.