The six-month loan relief period provided to SMSFs by related-party lenders in line with the Australian Banking Association’s commercial loan COVID-19 relief criteria has been extended by four months but trustees will need to prove they require the relief.
Smarter SMSF chief executive Aaron Dunn pointed out the initial six-month loan relief period provided by related-party lenders in line with criteria had been extended out to March 2021 but trustees would have to demonstrate their own need to have their loan repayment relief period extended.
“[The] six-month period has ended and whilst there are many people who have now moved back into either full payment or even partial payment, there are clearly others who cannot continue to pay, [for example, people] based in Victoria or within specific industries that continue to be substantially impacted,” Dunn said during a recent Smarter SMSF webinar.
“What has happened off the back of that is that there is a renegotiation period naturally happening with the banks, [and] there is an extension of time of up to four months to allow for the lender and the borrower to come up with what may be the best solution.
“In the context of SMSFs and related-party borrowing, in certain circumstances we would be able to look at and rely upon an additional four-month extension of time here.
“It’s important to remember that there is a need here to demonstrate that requirement for additional time.
He also highlighted the reduced minimum pension measure implemented in response to the financial impact of the COVID-19 pandemic, noting documentation would be essential in ensuring an SMSF’s compliance with the ATO’s treatment of excess minimum pension amounts for the 2020 financial year.
