Later in June 2020, the ATO issued an announcement entitled “Request to extend time to make minimum yearly repayments for COVID-19 affected borrowers under section 109RD“. It says, in part: “As a result of the COVID-19 situation, we understand that some borrowers are facing circumstances beyond their control. To offer more support, we’ll allow an extension of the repayment period for those borrowers who are unable to make their MYR” (minimum yearly repayment) “by the end of the lender’s 2019-20 income year (generally 30 June).”
Relating as it does to a possible inability of borrowers under Division 7A loan agreements to make the minimum yearly repayment required by 30 June 2020 due to the COVID-19 economic situation, the announcement provides a procedure whereby a borrower who is unable to make repayments on a Division 7A loan can request an extension of time to make the minimum yearly repayment under section 109RD of the Income Tax Assessment Act 1936.
The announcement provides a form that can be downloaded from the above web page that requests the extension of time to make the minimum yearly repayment. If approved, the extension of time will be until 30 June 2021.
The announcement does not say that the application must be made by 30 June 2020. However, it does say that no response will be received from the ATO until after the end of the 30 June 2020 tax year of the lender. The information states that a person can expect a response within five business days of lodging the application form. A separate form must be lodged for each loan.
There are details in the announcement regarding the required minimum yearly repayment as at 30 June 2021, which should be studied carefully.