From sladen.com.au: The Full Federal Court held in FCT v Bendel that an unpaid present entitlement (UPE) with a corporate beneficiary is not considered a loan under subsection 109D(3) of the Income Tax Assessment Act 1936.

The court dismissed the Australian Taxation Office’s appeal, on tne basis that a loan implies an obligation to repay, which was absent in this case.

Following the decision, potential legislative reforms and the Commissioner of Taxation’s administrative practices regarding UPEs may be influenced as taxpayers await possible appeals or adjustments.