The Full Federal Court’s decision in Commissioner of Taxation v Bendel (February 19, 2025) has redefined the tax landscape for trusts, ruling that unpaid present entitlements (UPEs) between a corporate beneficiary and a trust do not constitute a loan under s109D(3) of Division 7A.

Since at least 2009 the ATO has been of the view that an unpaid present entitlement (UPE) falls within the extended definition of ‘loan’ for the purpose of Division 7A. The ATO also considers that a UPE is not a debt for the purpose of the commercial debt forgiveness and Division 7A debt forgiveness rules.

What is the basis for the ATO views and what does this mean for dealing with – waiving, forgiving, assigning, or discharging - UPEs in the leadup to (possible) changes to Division 7A?

Division 7A is a complex area for practitioners and business owners. This webinar will consider the implications of a move away from trusts as a business vehicle due to the problems with corporate beneficiaries and UPEs, among other concerns.