Division 7A: Are UPEs to Companies Now Off the Hook?

The AAT decision in Bendel v FCT challenged the ATO’s longstanding view on whether unpaid present entitlements (UPEs) from a trust to a company can be classified as loans subject to Division 7A. Despite the decision, the ATO has maintained its position, leaving practitioners in a state of uncertainty as the dust settles two years later. This session provides a timely analysis of where things stand in 2025 and what tax practitioners need to know, including:

• A review of Bendel v FCT [2023] AATA 3074 and subsequent appeal
• How important is the trust deed when determining the tax implications of a UPE?
• Does the allocation of a UPE in the balance sheet, or the treatment as being held on sub-trust, have any bearing on Division 7A applying?
• Where do practitioners stand if:
  • using a AAT decision to support a reasonably arguable position in contrast to an ATO’s Interim Impact Statement?
  • a UPE previously attracted Division 7A consequences that would not have occurred if the AAT result was applied?
• The issue of loans and benefits from a trust to a company’s shareholders and associates when a UPE to the company exists
• To what extent has TD 2022/11 lost its relevance?
• How sec. 100A can have the final say with UPE situations
• Practical examples