Extensions to yearly repayments available
Under a Division 7A Loan – a borrower must make minimum yearly repayments (MYR) before the end of the lender’s income year (usually 30 June).
For those unable to meet the MYR due to the ongoing impact of Covid 19, the borrower may apply for an extension relief from the Commissioner. Upon the Commissioner granting the extension, any shortfall of your MYR (2020-2021), must be repaid to the lender by 30 June 2022.
If you had previously applied for relief for the Income Year of 2019-2020, and you were not in a position to pay the MYR (2019-2020) by 30 June 2021, you may be eligible to seek a further extension to pay your MYR (2019-2021) together with your MYR (2020-2021) by 30 June 2022. However, if a further extension is not granted, you may need to amend your 2019-2020 tax return to include the MYR (2019-2020) amount of the loan as a dividend.
Please note that any extensions granted do not alter, exempt, or vary your loan agreement with the lender in any way. The lender may impose penalties and default remedies in accordance with the loan agreement terms.
It’s critical that Division 7A Loans are property documented, and if not, this should be done urgently.
How we can help
If you are a borrower and would like to discuss the eligibility for Division 7A MYR COVID Relief or how the above changes may impact your eligibility or how to apply for an extension, or to have your Division 7A Loan properly documented, Shand Taylor Lawyers’ experienced commercial team are here to assist you.
Matthew Shannon, Partner
(07) 3307 4506
Patrick Sherlock, Senior Associate
(07) 3307 4542