With the start of a new financial year, this blog highlights changes that may impact on your business and on you personally.

12 month extension for certain repayments of private company loans

The ATO has granted a 12-month payment extension to 30 June 2021 for COVID-19 affected borrowers required to make a minimum yearly repayment on a loan from their private company.

The ATO says that as a result of the COVID-19 situation, it understands that some borrowers are facing circumstances beyond their control.

Borrowers can request the extension by completing a streamlined online application on the ATO website. The ATO says it will ask the borrower to confirm the shortfall, that the COVID-19 situation has affected them, and that they are unable to pay the minimum yearly repayment as a result.

Those affected can expect a response from the ATO within 5 business days of lodging the application form. 

 Transitional period for GST withholding on certain real property sales has ended

The GST withholding regime requires that payment of the GST liability on the sale of new residential premises or potential residential land be made directly to the ATO by the purchaser of the property at the time of settlement. As well there are notification requirements that must be satisfied by the seller prior to settlement.

Transitional provisions provided that contracts which were entered into before 1 July 2018 were not subject to the GST withholding regime, provided that payment (other than a deposit) was made on or before 30 June 2020.  Contracts for sale not settled by 30 June 2020 are now subject to the withholding rules.

Older contracts should be reviewed to ensure they include clauses specifically dedicated to the GST withholding obligations of both parties.

Generally, the GST withholding rate is 1/11th of the contract price. The contract price does not include the value of any usual settlement adjustments that are calculated at the time of settlement (e.g. rates and taxes).

If the margin scheme applies to the contract, the withholding rate is 7% of the contract price.

If the supply of the property is between associates and is without consideration, or is for consideration that is less than the GST-inclusive market value of the supply, the withholding rate is 10% of the GST-exclusive market value of the supply.