Earlier this month, the joint accounting bodies wrote to Treasurer Josh Frydenberg calling for the proposed changes to Division 7A that were set to be effective from 1 July 2020 to be further deferred by two years.
Accountants Daily understands that there has been no official word yet from the Treasurer, but signs point towards yet another deferral for the targeted amendments to Division 7A that were first announced in the 2016–17 budget.
“If Parliament isn’t sitting then we’ve got nothing to look at, and by default, we feel that it won’t happen this year and the ATO will have to make some announcements for transitional arrangements extending the deferral by at least another further year,” the IPA’s Tony Greco said.
“We know Treasury has got something to implement, but a lot of people weren’t very happy with where they were heading in relation to UPEs and consolidating all loans on a 10-year basis.
“We’re in this vacuum of not knowing how they are going to pick up from that consultation paper and move forward, but they would need to draft the legislation, put it up for consultation and then go through the long parliamentary process.”
The joint bodies — consisting of Chartered Accountants Australia and New Zealand, CPA Australia, the Institute of Public Accountants, the Tax Institute, the Law Council of Australia, and the Corporate Tax Association — have also called for temporary relief from minimum yearly loan repayments, and for a temporary reduction in the benchmark interest rate of 5.37 per cent to the medium business variable rate or lower in response to the COVID-19 crisis.
Commissioner Chris Jordan has also been called to specifically exercise his discretion under section 109Q of the Income Tax Assessment Act to ensure that where the minimum yearly repayment is not met, an amalgamated loan will not be treated as a dividend.
An ATO spokesperson confirmed that the Tax Office was currently prioritising developing further guidance on the issue, but it could not reveal the scope of relief or estimated date of release.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.