From www.taxinstitute.com.au: The Full Federal Court found that an unpaid present entitlement (UPE) owed to a corporate beneficiary is not classified as a loan under subsection 109D(3) of Division 7A of the Income Tax Assessment Act 1936.

A loan requires an obligation to repay, whereas a UPE merely entails an obligation to pay.

This decision may lead to significant implications for taxpayers and the Australian Taxation Office, particularly regarding how UPEs should be managed in light of potential appeals and legislative changes.