The ATO’s proposed treatment of unpaid present entitlements: part 1

The ATO’s proposed treatment of unpaid  present entitlements: part 1
 

Taxation in Australia

This is the first of a two-part series discussing the proposed treatment of unpaid present entitlements (UPEs) by the Australian Taxation Office (ATO). On 10 June 2015, the ATO released TD 2015/D5 and TD 2015/D4 discussing, respectively, the treatment of UPEs for the purposes of:

  • bad debt write-offs in s 25-35 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) (s 25-35); and  
  • Div 7A of the Income Tax Assessment Act 1936 (Cth) (ITAA36) (Div 7A).

On that day, the ATO also released TR 2015/D2 discussing the maximum net asset value test applicable to the capital gains tax small business concessions1 (MNAV). It was hoped that these publications would clarify the treatment of UPEs. However, there are still unresolved issues and complexities requiring review. This article discusses the draft taxation determinations. Part 2 will discuss the draft taxation ruling in the September 2015 issue of this journal.

Download the full paper to continue reading: The ATO’s proposed treatment of unpaid  present entitlements: part 1