From www.bartier.com.au: On 19 February 2025, the Federal Court ruled in Commissioner of Taxation v Bendel that an unpaid present entitlement (UPE) is not classified as a loan under Division 7A of the Income Tax Assessment Act 1936.

The court determined that for an obligation to be considered a loan, it must create a requirement to repay a specific amount, which was not the case for the consensual UPE arrangement in question.

Despite the ruling being favorable for corporate beneficiaries, the Australian Taxation Office may still apply other provisions, such as section 100A, to UPE arrangements.