The above article outlines the ATO view on how Division 7A applies to unpaid present entitlements (UPEs) owed by trustees of trusts to corporate beneficiaries within the same family group, in particular the position of the Commissioner (of Taxation) on whether such UPEs are loans for Division 7A purposes.

It includes a look at how this position has changed over time and how the administrative approach broadly taken by the ATO since December 2009, and arguably also largely adopted by the tax profession since then, has been challenged by the Administrative Appeals Tribunal (AAT) decision in Bendel and Commissioner of Taxation [2023] AATA 3074 (Bendel).

Finally, it considers what the outcome of the Commissioner’s appeal of the AAT decision in Bendel might mean in practice (either way), and where things are at in the meantime.