The ATO has updated its practice statement on Div 7A to reflect concessions for the lodgment of trust income tax returns for the 2018/19 income year as part of its COVID-19 response. This update complements the ATO’s Division 7A advice to companies.
The update to PS LA 2010/4 clarifies that for entitlements created in the 2018/19 income year, any unpaid present entitlements (UPEs) of corporate beneficiaries would need to be placed on sub-trust by 5 June 2020, or any later lodgment date allowed by the Commissioner. In particular, the definition of “lodgment day” for a private company or a trust in the practice statement has been amended to provide that it is the earlier of:
To avoid Div 7A consequences for certain recipients of payments or loans made by the company during the 2018/19 income year, the ATO said that a company must take the following actions before the deferred lodgment day (or the actual date of lodgment of their 2018/19 income tax return, if earlier):
The Commissioner will soon be issuing further guidance for those affected by COVID-19 with minimum yearly repayments due for the year ended 30 June 2020.