UPEs and the maximum net asset value test

A Matter of Trust

Taxation in Australia

This article discusses the complexity associated with a trust satisfying the maximum net asset value test for the purposes of accessing the capital gains tax (CGT) small business concessions where it is unclear whether an unpaid present entitlement (UPE) would be classified as a liability relating to the CGT assets of the trust. Adverse taxation consequences arising as a consequence of these complexities could be managed through careful planning and the preparation of appropriate documentation. Unless otherwise stated, all legislative references in this article are to the Income Tax Assessment Act 1997 (Cth) (ITAA97).

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