A Matter of Trusts
Irrespective of whether UPEs are loans under Div 7A or not, what is often forgotten is that dealing with UPEs can result in capital gains for beneficiaries.
The talk of the tax world since late 2023 has been whether an unpaid present entitlement (UPE) with a corporate beneficiary is a loan under the definition in s 109D of Div 7A of the Income Tax Assessment Act 1936 (Cth) (ITAA36).1
While the High Court, or perhaps the parliament, will have the final say on that question in the next few months, what is often forgotten is that dealing with UPEs can have consequences under other provisions in the income tax legislation. This article will focus on the CGT rules in Pt 3-1 of the Income Tax Assessment Act 1997 (Cth) (ITAA97).
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