From www.accountantsdaily.com.au: The Federal Court ruled in favor of taxpayer Steven Bendel, dismissing the ATO’s appeal in the case regarding the treatment of unpaid present entitlements (UPEs) under Division 7A of the ITAA 1936.

The Court determined that UPEs do not constitute loans as defined by the ATO’s interpretation, affirming an earlier ruling by the Administrative Appeals Tribunal.

This decision challenges the ATO’s established view, which considered unpaid distributions to a corporate beneficiary as loans, leading to potential tax implications for both the trust and the corporate beneficiaries.