From hlb.com.au: The Full Federal Court ruled that unpaid entitlements for corporate beneficiaries of family trusts should not be treated as loans, challenging the ATO’s prior stance requiring compliance with Division 7A loan terms.

This decision, from the case “Commissioner of Taxation vs Bendel,” may significantly impact future distribution decisions of trust income.

The ATO plans to appeal the ruling and continues to assert its interpretation of tax law while considering the implications of section 100A for unpaid entitlements.