From www.pitcher.com.au: The Full Federal Court’s decision in Commissioner of Taxation v Bendel overturns the Australian Tax Office’s long-held view that unpaid present entitlements are classified as loans under Division 7A, clarifying that a loan requires a payment and obligation to repay.

This ruling impacts how taxpayers treat UPEs, particularly those arising in the 2023 and 2024 financial years, as they must now consider whether to classify them as loans or maintain them as UPEs.

The Australian Tax Office has not yet indicated how it will respond to this decision, leading to uncertainty about potential legislative changes or appeals.