The Australian Taxation Office (ATO) outlined its compliance approach in circumstances when a trustee may experience liquidity issues and that affect the trustee’s ability to satisfy a beneficiary's entitlement because of the coronavirus (COVID-19) pandemic.
According to the ATO information, such instances may be triggered when financial institutions impose restrictions that affect the way a trustee can deal with its assets. The ATO stated that it will not undertake compliance action to consider the validity of an entitlement or the application of section 100A of the ITAA 1936 in circumstances when a trustee is affected by liquidity issues due to COVID-19 and is therefore unable to satisfy the entitlement.
This approach is intended to provide relief and certainty to trustees and associated private groups who experience genuine liquidity difficulties.
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