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Division 7A relief available to SMSFs

Published by:
Katerina Sousalis
Published on:
July 23, 2020
Modoras Pty Ltd ABN 86 068 034 908
Division 7A relief available to SMSFs

The ATO has announced an extension of time to meet the minimum yearly repayment for a complying Division 7A loan for those who have been impacted by COVID-19.

The extension means a shortfall in the minimum yearly repayment won’t be treated as a deemed dividend at the end of the lenders 2019-20 income year, if the shortfall is paid within the extended time frame.

Information on how to apply can be found here.

The ATO has confirmed that SMSFs in this position will be able to use the ATO’s streamline application process to apply for an extension of time to meet the minimum yearly repayment on complying Division 7A loans.

SMSFs must make up the shortfall of the minimum repayment by 30 June 2021 to ensure the shortfall is assessed as a deemed dividend.

Beware! Payment relief terms must be similar to the conditions that commercial banks are offering in relation to real estate investment loans, in order for the ATO to accept that parties are dealing on an arm’s length basis.

More information on Division 7A relief can be found on the ATO website here.

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IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (Number 233209). The information and opinions contained in this presentation is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. Any individual making any investment or borrowing decisions should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to borrow funds or purchase, sell or hold any particular investment. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of, credit contract entered into or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog may change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

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