Sladen Events
For whom the Bendel tolls: Division 7A, UPEs and the end of the loan myth
The bell has tolled on the Commissioner's long-running argument that an unpaid present entitlement is a "loan" under Division 7A. In Commissioner of Taxation v Bendel [2026] HCA 18, a 5-2 High Court majority held that where a trustee's resolution effects a "setting aside" onto a separate trust, no loan arises under subsection 109D(3). The decision turns on the precise language of the trust deed and the resolution - and it changes the Division 7A calculus for every discretionary trust with a corporate beneficiary.
After Bendel: Division 7A, Anti-Avoidance, and Beyond
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.
UPEs – equitable obligations or debts, Division 7A, and what does it mean?
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?
The shift to corporate entities and 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.